Insurance will not reduce your business' risks but you can use it to protect against losses associated with some risks. This means that in the event of a loss you will have some financial compensation. This can be crucial for your business' survival in the event of, say, a fire which destroys a factory.
Some costs are uninsurable, such as the damage to a company's reputation. On the other hand, there is business insurance you must have by law.
Insurance companies increasingly want evidence that business risk is being managed. Before they will provide cover, they want proof that you have processes in place to minimise the likelihood of a claim. You can ask your insurance adviser for advice on appropriate processes - see choose an insurance adviser and present your risk.
You can use a business interruption policy, for example, to insure against loss of profit and higher overheads resulting from, say, damaged machinery. Employers' liability insurance - required by law - enables businesses to meet the costs of compensation and legal fees for employees who are injured or made ill at work through the fault of the employer.
You may also want to consider:
- products liability insurance
- key man insurance
- group life assurance
Liability insurance - employers' liability, public and products liability insurance - is designed to pay any compensation and legal costs that arise from neglect or breach of duty. For more information, see liability insurance.
Key man insurance is designed to cover you for the financial costs of losing key personnel. Group life assurance is provided by employers as part of a benefits package and pays out a lump sum to an employee's family should the employee die. See insure your business - people, life and health.