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Business Insurance

Buying insurance

You can buy insurance:

  • direct from an insurance company; or
  • through a third party that arranges insurance, e.g. insurance brokers, insurance agents, banks, finance companies.

Most insurance companies or brokers offer package policies that combine different types of insurance, e.g. for professional offices and retail outlets.

You can also ask that a standard policy be styled to meet your business's specific requirements. It is also usually possible to extend a basic cover, e.g. a fire policy can be extended to include risks like earthquake.

Before you take out insurance, have a look at our - under downloads - it lists a number of issues you should consider.

Types of insurance

The types of insurance you may need include:

  • property insurance - compensation from loss or damage to property;
  • liability insurance - cover for legal claims against the business, e.g. for a personal injuries claim by a customer;
  • workers compensation insurance - cover for workers who are injured on the job;
  • loss of gross profit insurance - cover for loss of profit due to business interruption; and
  • disability insurance - cover for loss of income due to injury, illness or death.
  •  Types of Insurance (detailed list)
    • Workers’ Compensation
    • Burglary (not to be confused with theft)
    • Fire and Perils
    • Storm and Tempest (including earthquake and flood if required) Consequential Loss
    • Money
    • Motor Vehicle
    • Machinery Failure
    • Products Liability
    • Faulty Workmanship
    • Personal Accident and Sickness
    • Business Interruption
    • Goods in Transit
    • Professional Indemnity
    • Life Assurance (includes Key-man, Partnership, Permanent Disability)
    • Multirisks
    • Export Credit
    • Marine Insurance
    • Fidelity Guarantee

Property insurance

This usually covers losses from theft, fire and other specified damage. This type of insurance can cover anything agreed to between you and the insurer, e.g. cover for breakage to plate glass windows, hot water systems etc.

The losses can also include consequential losses from damage (e.g. profits while you have to close the business during repairs).

Liability insurance

This includes:

  • the well-known insurance called "public liability", which covers you for claims from people injured as a result of your business operations. This would include claims for "negligence", where a person suffers damage because of a breach of the business's duty to take reasonable care in its operations;
  • product liability insurance, which covers you for losses or damage caused by faulty products supplied by your business;
  • professional indemnity insurance, which covers professionals for losses caused by giving the wrong advice or acting to the detriment of your clients;
  • indemnity insurance for company officers (e.g. directors) to cover for claims made against directors personally as a result of business operations.

Disability insurance

This covers you if you are forced to stop working because of an injury or illness. There are many different types of disabilities that can be covered by the policy. Generally the insurance pays a percentage of your gross salary during the period of disability.

Workers compensation insurance

This covers claims by workers for work-related injuries. Generally claims are made for loss of earnings, medical expenses and/or permanent impairment.

Loss of profits

This will cover the loss of profits if the business is interrupted because of damage to property resulting from an insured incident (e.g. fire). It can also cover wages to employees and the maintenance of anticipated net profits.

Conditions

There are a number of general conditions that apply to most insurance policies. These include:

  • the insured's duty of utmost good faith. You must disclose to the insurance company anything that is "material" to the insurance contract, ie anything that would be relevant to the decision of the insurance company in its decision to issue the policy. This is often called the duty of disclosure. A good question to ask is: "Would this information affect the decision of a reasonably prudent insurer to accept the risk, or affect the level of the premium demanded by the insurance company?" For example, have you been refused insurance cover by another company? You are also required to be honest in any claims made on the policy, and cooperate with the insurance company; An insurance company can refuse to pay the claim if you were aware of the circumstance but you did not disclose it. This is called "fraudulent non-disclosure".
  • the insurance company's duty of utmost good faith. This requires the insurance company to promptly assess and pay your claims, and disclose any "material" facts that would be relevant in your choice of an appropriate policy;
  • having an "insurable interest" - to insure something you must have a legal interest in it (e.g. you are the owner). For example. you can insure your workers, the business property, yourself, your business partner etc;
  • you can only recover your loss. In other words, you cannot make a profit from the claim against the insurance company;
  • the insurer's duty to give notice that the policy is due for renewal. Generally this must be at least 14 days.

Exclusion clauses

These are clauses in the contract that limit the liability of the insurance company. For example, there may be limited liability if a theft occurs when windows are not secured according to the policy's requirement. You should get legal advice if the insurer relies on an exclusion clause, because it may not apply in certain circumstances e.g. the insurer may not have brought the exclusion clause to the attention of the insured.

Regulations

All insurers are licensed under the law. Insurers brokers must register annually with the Insurance Commissioner, which requires that they be insured to cover consumers in case of negligence.

Disputes

Many disputes are about the duty of disclosure, when the insurer refuses the claim.

It is important to get legal advice if you make a claim which is rejected. Avenues for dealing with the dispute include:

  • Making a complaint in writing to the Insurance Enquires and Complaints Limited, who will assist with the administration of the complaint and pass it on to the insurer;
  • The Insurance Brokers Dispute Facility hears disputes between the insured person or company and insurance brokers in certain circumstances.

 

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