18 Nov Business liability insurance warning

Business liability insurance warning

The British Insurance Brokers’ Association (Biba) has released a new publication which advises small businesses that they need to be extra vigilant in ensuring they have sufficient business liability insurance in place at a time when many are “potentially more vulnerable to the risks of under-insurance as a result of uncertainty in the run up to Brexit leading to a fall in the value of the pound”, with one major concern the increased cost of replacement machinery, equipment and other goods.

The warning serves to underline claims from the Financial Conduct Authority (FCA) that the business world is currently characterised by “an alarming degree of under-insurance”.

Steve White, chief executive of Biba, said that businesses need to pay particular attention to their business interruption cover and stated his belief that firms should consider 24 months as the bare minimum it will take for them to return to normal trading and cash flow levels.

However, Biba says that all aspects of business liability insurance need to be properly looked at, including the following:

• Damage to property
• Injury to employees
• Injury to the public and clients
• Cyber risks
• Valuation of stock
• Buildings value and buildings cover
• Valuation of plant machinery

Furthermore, White warned against simply buying business liability insurance products that are not properly tailored to meet an individual business’s needs as buying something “off the peg” can often leave a business underinsured in the event it faces the prospect of having to make a claim for some form of loss or damage.

This advice is particularly important in the wake of Brexit as the cost of importing replacement goods from the European Union may increase for those looking to make claims.

The Federation of Small Businesses (FSB) has added its voice to Biba’s, saying that small businesses need to make sure they are fully protected against all possible insurance risks so that they can remain viable even “when the worst happens”.

The organisation’s national chairman, Mike Cherry, said that its members should “mitigate the risks of business failure or constricted cash flow resulting from unexpected costs” and advised that Biba’s guide could be a “helpful tool” for those businesses that whose insurance arrangements are currently inadequate.