Dealing with business insurance claims

SmallBusiness.co.uk provides some points to help you if you need to make an insurance claim

The problem is that good business insurance can replace your buildings, machinery and stock, and can compensate for your loss of profits, but it cannot replace your customers or the goodwill that you may lose during even a short stoppage.

The actions you take will often determine the outcome of the insurance claim and the future success – or otherwise – of your business.

Now that cybersecurity is an even bigger issue than it was when in 2007 when this article was originally published, so that’s another risk to you and your customers.

SmallBusiness.co.uk and Federation of Small Business (FSB) claims consultant Peter Satchel provide some points to help should you need to make an insurance claim:

Plan ahead – What you do on day one may make or break your business. You need to draw up an action plan and know where you are going.

Be prepared to prove the value of your claim – Insurance companies will almost certainly want to check the validity of a claim. If something has been damaged, it may not be practicable to keep physical remains of, for example, foodstuffs, so it is best to ensure you record and photograph such items before you dispose of them.

Insurance firms employ companies that specialise in cleaning and removal of damaged stock, contents and so on. These companies will often carry out an inventory as well, but you should check it very carefully against your list.

Stand up for your business – The insurers want to save money, but you need to save your business. If you don’t like what is being suggested, say so. You have the right to argue. Remember that you should be in charge.

Think of the consequences – If you are a retailer and the insurer suggests that you might have a sale of salvaged goods, you may want to resist this. You may find that you end up selling goods at a discount that you could have made a claim on. You should insist that damaged stock is removed to a reputable salvage dealer, de-labelled and sold well outside your region.

Insist on independent builders and surveyors – Where major building works are concerned, you should insist upon an independent surveyor (there is cover for such charges under most policies) who can identify the work that needs to be done, put the matter out to tender and supervise the repairs. They will provide you with certification at the end of the procedure, which ensures that the value of the building is maintained.

Focus on running your business – If needs be, call in a professional to deal with your claim. It will save you time, could result in a better settlement and may even save your business.

Talk to your customers – What you tell your clientele is important. They need to know that they can rely on you to supply the goods. They do not want broken promises or lies.

Should you use a loss assessor? – It is generally reckoned that the use of a loss assessor, who will assess the damage and act on your behalf to gain compensation, improves the return on the claim by as much as 30 per cent. In general, costs are under 10 per cent of the eventual payment.

What types of insurance could help my business?

Public liability insurance

Public liability will keep you covered if a customer or member of the public gets injured as a result of your business. For example, say you own a photographer working at a wedding and one of the guests trip over your cables and claims for damages. It also protects you against damage to their premises or property – say, the bride’s wedding dress.

Related: How to claim on your public liability insurance

Employers’ liability insurance

This one is an essential for those of you who have employees, interns, apprenticeships or even seasonal staff. Employers’ liability insurance covers you if your employees or ex-employees develop a work-related illness or get injured on the job and they make a claim against you. It covers legal costs, medical costs, lost income and possible court-ordered compensation.

Related: Employers’ liability insurance – what is it and do you need it? 

Professional indemnity insurance

If you’ve made a mistake, been negligent or given bad advice that’s caused losses or damaged a client’s reputation, professional indemnity insurance could see you through. This insurance covers you for settling claims and though not legally required, some clients may require you to have it.  

Related: What is professional indemnity insurance?

Cyber insurance

As mentioned earlier, technology has revolutionised the way that businesses operate. However, it’s also given an easy ‘in’ for cyber criminals and hackers to trick you into handing over sensitive details or locking you out of your IT systems. Cyber insurance can cover the costs of getting you back online after a cyber breach as well as repairing any reputational damage incurred and a loss of income from your site and/or emails being down.   

Related: What is cyber insurance?

Directors’ and officers’ insurance

Also known as management liability insurance, this cover protects the people in the business who have senior management responsibilities.

The insurance guards against claims of breaching health and safety laws, misadministration of the company pension or making errors in financial reporting. It will defend you in the event of a fine or a disqualification while covering legal and compensation costs. If you’re seeking investment, you’re likely to be asked if you have this cover.

Financial insurance

Trade credit insurance, for instance, keeps you covered if a client can’t pay an invoice on time (or at all) so that your cashflow isn’t dented.

Find business insurance now

If you’re looking for business insurance and aren’t sure where to begin, why not use our free quote tool to find a tailored commercial combined policy that will cover all your needs.  

Simply fill in our free quote-finding form and answer a few questions about your business (it takes less than a minute).

Read more

Business insurance: Everything you need to know – Insurance offers vital protection from the crippling costs of a claim against your business. But which insurance do you actually need and which is merely optional?

Business insurance: 10 common questions answered – Some business insurance is compulsory. For the non-compulsory insurance, it depends on the sector your business operates and the risks that come with it.

Adam Wayland

Uriel Bruen

Adam was Editor of SmallBusiness.co.uk from 2006 to 2008 and prior to that was staff writer on sister publication BusinessXL Magazine.

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