~ Contents ~

• Protecting medium and small businesses

• Saved by a policy

• Comprehensive corporate coverage

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Protecting medium and small businesses

If you are running your own business it pays to ensure that it has adequate insurance coverage so you can sleep better at night

So you may think that the last thing you need now is the additional expense of insurance premiums tying up valuable capital that could be used to build your business.

You could not be more wrong.

WHY DO I NEED BUSINESS PROPERTY INSURANCE?

Small business property insurance is the business equivalent of life insurance - you think you don't need it until you do. By then, it's too late.

Getting business insurance is most likely one of those business responsibilities relegated to a low priority simply because the proprietor believes he does not need it and cannot afford it.

But the truth is a small business cannot afford not to have adequate insurance because without the appropriate insurance coverage, a disaster can wreak havoc on your assets, or worse still, shut down your company permanently. That's not what you want, is it?

Without some coverage, you are unnecessarily putting your livelihood at risk when you should in fact be prepared for any risks in your business and the losses they can cause.

WHAT KIND OF INSURANCE DO I NEED?

It may be initially difficult to determine the proper insurance package you need for your small business. The first thing that comes to mind is protection of your physical assets - your property.

You could start by getting a basic business property insurance package that would generally cover your losses in the event of fire or a lightning strike. This sort of coverage typically falls into two categories - building and personal property.

Your building coverage, sometimes referred to as "real" property, protects you should something happen to your building. These policies generally cover damage caused by fire and lightning.

Some things such as floods, earthquakes, storms, damage caused by aircraft, automobiles or vandalism are excluded from your basic fire policy. However you should think about adding these options to your basic small business policy. Although this additional coverage may cost a little more, it always pays to play safe.

This frees you to focus on what needs to be covered more - your personal property. Such a policy would cover your business from loss of, or damage to, the property inside your building due to events such as fire or theft. As there is a higher likelihood of a burglary these days compared to a fire, it would be prudent to ensure you are protected in case a theft occurs.

Check if your policy covers the more expensive items such as your computer and telephone systems. In fact, the best thing to do would be to take a complete inventory of your property, determine the items of value and decide if each is worth insuring. Your equipment may actually come under an "all risks" insurance package, which covers your personal property.

If you handle large amounts of cash and inventory on your premises, you may also want to purchase a "money" policy and a "marine" policy. Essentially, the money policy would be to cover the cash on your premises or in transit, for instance when you are depositing or withdrawing cash from the bank.

Meanwhile, a "marine" policy does not really have anything specific to do with ships, it is merely an insurance policy for your goods in transit that ensures protection in case of damage or accident.

DO I HAVE ENOUGH INSURANCE COVERAGE?

So now you have a basic business property insurance policy that would protect you from loss. However, it would be a prudent move to prepare a mental checklist of what you are covered for and what you are not.

For instance, you may have enough insurance to cover the cost of repairs or rebuilding but do you have insurance to cover the disruption to your business a disaster can cause? You may want to review your business insurance policies after a while to see if there are any gaps in your coverage or if, once you have established your business, you need any upgrades.

For instance, now that you have a successful business, you may want to think about taking up a business interruption policy. Essentially, this would cover income interruptions due to damage to your business premises.

However, if you are in doubt about anything, the best thing to do is consult your insurance agent who would be able to advise you on the insurance packages available.

^ Article extracted from NST Property Times - Signed&Safe

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Saved by a policy

A beautician's prudent in taking out a policy delivered her and her partner from possible financial ruin when disaster struck

After months of careful planning, which included studying their clients' needs and gauging their loyalty, both decided that they had enough resources and potential clients to start out on their own. So they set a partnership and opened up their own small beauty salon, which grew within just one year into a booming business.

The duo then decided to buy their own premises and expand the business. They found a two-storey shophouse that suited their purpose and with a business loan and some assistance from family members, they financed the purchase and renovated and equipped part of the ground floor with the tools of their trade. They rented out the remaining space to a hairstylist and the top floor to a trading company.

Being the cautious type, Jenna decided that since this was their own building, they should have some property insurance coverage. She also decided to find out if she could insure the fixtures and their equipment - just in case.

Lisa objected initially because she felt they needed to conserve their funds. Besides, she argued, the bank already had an insurance policy on the building. However, Jenna managed to persuade her to at least spring for a basic fire and lightning insurance policy for the building; the fixtures, which included their renovations and their equipment.

Business went well and their tenants did not cause any trouble. In fact, they both found that their hairstylist tenant brought in more business for them while the female office staff on the top floor had become regular clients.

Then early one morning, Jenna received a call from one of the owners of a neighbouring shop who had also become a regular client. She was told that her shop was on fire. She called Lisa, who was still asleep, then rushed to the scene, where firemen were already fighting the blaze, which had apparently begun on the ground floor.

Lisa joined her at the scene a while later and together they watched their salon and its contents being consumed by the flames. The firemen managed to put out the fire three hours later.

Lisa sat by the glowing embers and cried her eyes out, thinking of all the years of hard work and effort - now gone up in smoke. But the shrewd Jenna didn't shed a tear because she remembered the insurance policy they had taken to protect their assets. As soon as she got home, she called her insurance agent who advised her to lodge a police report about the fire. Several days later, the two took a copy of the police report and went to their insurance company to file their claim.

The insurance company appointed an independent adjuster to look into the possible cause of the fire. The adjuster interviewed Jenna and Lisa as well as their tenants, who did not have insurance. All three recalled switching off all electrical items, except for some external lights the night before the fire.

However, the building was fairly old and close inspection showed that there were many lengths of wiring concealed within the walls. And due to the large number of food shops in the vicinity, the area also had a rodent problem.

The adjuster concluded that he could not rule out the possibility that the rodents had been testing their teeth on the live wires. He further concluded that a small fire could have possibly ignited from a short circuit in the main switchboard, which subsequently spread to consume the remaining contents on the ground floor.

Based on these findings, the insurance company noted the validity of Jenna and Lisa's claim and the amount of damage caused. It compensated Jenna and Lisa for their business equipment, minus depreciation of course. It also noted the damage to the building such as the internal partition walls as well as items like plumbing and bathroom fixtures, which had melted from the extreme heat of the fire.

After being informed by the company that hey had a valid claim, Jenna and Lisa also managed to get a quote for the electrical work required to get the building back into working order. The insurance company paid the contractors for the electrical work as well as the refurbishment.

Within three months, the two friends were back in business.

^ Article extracted from NST Property Times - Signed&Safe

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Comprehensive corporate coverage

Big business is a risky game but there are ways and means of minimising the multitude of risks a corporation faces each day

With Malaysia zooming towards industralised country status, more and more corporations are being born each day to cater to the country's commercial and industrial needs.  Businesses are also growing and expanding faster, aiming to capture a large slice of not just the domestic market, but also the global market.

However, big business is risky business and corporations are more in need of protection than their smaller counterparts, especially as they have more physical assets to protect and are more reliant on these assets. To ensure they do not lose all their investment, they have to ensure that they are insured every step of the way.

Where do I start?

More businesses are venturing into manufacturing because there is simply, more money to be made there. There are however, more risks as well.

The businessman who wants to venture into the industrial sector has to ensure he has adequate protection from the beginning, as he would be sinking large amounts of capital into the venture. Planning an insurance programme will be a good start for peace of mind in the long-term.

The risk he faces begins even before the factory is built. It begins when he buys or leases the land or premises for the factory. Prior consultation with an insurance agent will facilitate the involvement of an insurer at an early stage and provide risk improvement measures to minimise the prospect of loss or damage to the property.

To protect the building stage, the land should be covered by a contractors' all risk policy. This essentially insures the construction stage of the factory, in case of accident or damage.

If the businessman is ordering equipment or machinery, he has to make sure these are protected while on their way from the manufacturers or assemblers to his new factory. Therefore, he would need marine insurance. Once the equipment or machinery arrives, the businessman has to allot a period of time for it to be put together, installed and then tested before actually starting up production in the factory. Even then, accidents could happen. To protect himself - and the all important equipment - the businessman should have an erection all risks policy during that period. This policy essentially covers any accident or damage that occurs from the time the equipment is being put together until it is in working order and handed over to the businessman.

During the whole process, it would also be a prudent move for the company to ensure that it has a workmen's policy and liability insurance in case of any accidents among staff or third parties.

Some of these insurance policies such as the contractor's all risks and equipment erection all risks policies come under an engineering sub-category of property insurance.

Once the factory is completed and the equipment installed, it would be almost time to start production. However, protection does not just end once everything is built up and put together.

A Comprehensive Range

The businessman now has to ensure that his entire business - from his building to the equipment to his personal property - has some measure of protection. Basically, he has to protect his business operations. Like his smaller-sized counterpart, the businessman would have to insure all his property against perils such as fire, lightning, flood and storms. Unlike his smaller business counterpart, however, he has more property to protect.

As large premises are likely to have large glass surfaces - especially if it is a modern building - the businessman should also consider glass breakage insurance, as replacing plate glass can be a rather expensive process.

If he's prudent, he will also ensure that his equipment is covered under a boiler and machinery policy. The policy essentially covers repair and replacement costs from damage other than perils such as fire, lightning or flood.

To further protect himself - and his business - the prudent businessman should also take out a business interruption policy, which would cover the loss of wages and earnings plus net profits that the business normally would have been able to produce assuming there had been no loss or damage to the property. However, the business does not merely depend on physical assets but also on other smaller, yet possibly more expensive, property.

To protect personal property such as office equipment, inventory and even cash on the premises, the businessman should make sure he has comprehensive burglary and theft coverage. Such a package generally covers burglary and theft of property on the insured premises.

However, it would also be prudent for the businessman to have a separate money policy, especially if he needs to keep large amounts of cash on the premises. This policy would protect money on the premises or in transit to or from the bank from incidences such as robbery or theft.

As incidences of white-collar crime increase, companies have to protect themselves against dishonest employees. To cater to this specific need, insurers come up with policies to cover owners of businesses in the event of losses due to acts of dishonest employees such as embezzlement.

Am I adequately covered?

For relatively large companies, the sensible thing to do when trying to ensure the best possible coverage is to go to an insurance broker or agent who would be able to define their needs and propose the best - although not necessarily the cheapest - business policy package around.

The next best thing is to get in touch with a reputable insurer that has a good service track record. If it has good customer service, you can be assured that your insurance concerns will be properly taken care of.

^ Article extracted from NST Property Times - Signed&Safe

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