A company’s operations can be interrupted without warning. The cause may be a technical malfunction, human error or a natural phenomenon.
In particular, new and growing companies should ensure that any business and property risks have been covered in advance.
Below, we summarise three common types of insurance to ensure that your company stays in business despite losses.
General liability insurance for businesses
Accidents can happen to anyone. This may be particularly worrisome when a company is just starting out or planning to expand.
General liability insurance for businesses covers bodily injuries and material damage to third parties caused by the company’s activities or products, for example. Once it is clear who is liable in any situation, both the business owner and customers can have peace of mind. If you are planning to sell the company, liability insurance offers a clear advantage for the seller. Future buyers will not be held financially liable for the company’s past mistakes.
The most common types of liability insurance are business liability insurance and product liability insurance. Business liability insurance covers damages that occur during work performed for a client. As its name implies, product liability insurance covers damages caused by products.
‘Business liability insurance is a policy that all companies should have, whatever the nature of the activities and the line of business. A continuously changing business environment, new regulations and digitalisation impose new needs also for the insurance-based risk management of companies,’ says Timo Toimi, Senior Underwriter at Pohjola Insurance.
Business interruption insurance
Few companies are financially strong enough to cope with problems caused by losses such as fire or water damage without assistance.
Business interruption insurance helps companies secure their financial performance even in the event of significant property damage. Business interruption insurance covers damages such as profit losses caused by a sudden interruption of operations. Business interruption insurance helps companies cover the costs of moving to temporary premises.
‘For example, after a fire at a vehicle inspection station, business interruption insurance covered both immediate profit losses as well as moving expenses to and higher lease at temporary premises,’ says Jani Salonen, Senior Underwriter at Pohjola Insurance.
When considering the need for business interruption insurance, think about how the company would fund its fixed expenses if all sales were to be interrupted by a loss.
‘It is also advisable that businesses evaluate whether their operations can be moved to new premises and how long such a move would take,’ Mr Salonen adds.
Legal expenses insurance for businesses
A company may end up in a costly legal dispute even when the entrepreneur is conscientious and the activities faultless.
Special attention should be given to contracts. If the company operates on leased premises, the lease may contain risks that can endanger operations if realised. The same applies to lease agreements for equipment and machinery.
‘Legal expenses insurance covers legal expenses in disputed civil cases, criminal cases and non-contentious civil cases. The insurance may also be expanded to cover the opposing party’s costs,’ Mr Toimi says.
Legal expenses insurance for businesses covers only contracts made during the validity of the insurance. For this reason, legal expenses insurance should be taken out immediately when starting out and kept up-to-date as the company grows.
Don’t forget these types of insurance
For many companies, information is the most valuable form of property, and businesses are increasingly dependent on information systems. Data breaches or malicious software can paralyse business operations entirely and result in unexpected costs if the company is not protected by cyber-insurance.
‘Cyber-insurance helps companies prepare against risks such as cyber blackmail, denial of service attacks and personal data breaches. Cyber-insurance is an increasingly popular form of cover, and in the future, it will be as essential a part of business insurance cover as conventional liability insurance,’ Toimi states.
Real estate insurance for businesses protects the company’s or housing company’s property against risks related to the ownership or management of residential, office and commercial property for which the company’s management or housing company board is liable.
Many entrepreneurs are accustomed to a mobile lifestyle. Motor vehicle insurance for businesses includes both mandatory and voluntary policies and cover damages such as vandalism or a broken windscreen. Motor vehicle insurance for businesses is always tailored to the company’s needs.