Have you got it covered?

Comprehensive insurance is crucial for trade businesses

Business interruption cover is an important consideration, say insurance firms

FROM astronomical increases in rateable values to spiralling operating costs, the trade has been hit with a barrage of price hikes in recent times.

It follows, then, that many operators are looking to make savings where they can.

But licensees have been warned that one area in which they can’t afford to cut corners is insurance.

Brokers contacted by SLTN said that for businesses in the licensed trade in particular, having robust and comprehensive insurance is crucial.

“Arranging the correct insurance is vital to any business, and can be the difference between swift resumption of trade and the closing down of a business following a large loss,” said Andy Armstrong, underwriting manager at Morgan Richardson.

“At a time when businesses are tightening their belts it is equally important that the right level of cover is being arranged.

“Opting for the cheapest quote may mean corners have been cut reducing the protection you and your business are actually benefiting from.”

Victoria Romero-Trigo, director at NDML, agreed, saying it is “extremely important” that operators ensure their business is covered by an “appropriate insurance policy” that will respond in the event of a claim.

“Worst case scenario from a major incident is that a business wouldn’t be able to recover,” she said.

“A good insurance policy would have to be an ‘all risks’ commercial combined package with a bespoke policy wording pertinent to the client’s demands and needs; the policy should cover all perils that the businesses are exposed to.”

So what should licensees look for when it comes to cover?

Beyond buildings insurance for the premises itself, contents insurance is vital and should cover fixtures, fittings, equipment and stock in the event of an incident like flood, fire or storm damage, as well as malicious and accidental damage and theft.

Operators must also ensure they have employers’ liability insurance, which is required by law and will cover any claim made by an employee should they fall ill or be injured during the course of their work.

It’s also advised that licensees protect their businesses from claims by the public – should, for example, a customer trip on a broken step and make a personal injury claim.

The cheapest quote may mean corners have been cut and there is less protection.

“In an increasingly litigious society, adequate cover is required for public liability; slips and trips do happen, particularly where the public visits the business premises,” said Armstrong at Morgan Richardson.

“With the increase in ‘no win, no fee’ firms now offering their services, along with the increase in awards being given by the courts, you will appreciate the need for this cover.”

Business interruption cover is another crucial consideration.

If a venue has to close for a period of time following a flood or fire, for example, business interruption insurance is designed to protect the business from the loss of income whilst repairs are carried out.

Armstrong at Morgan Richardson said licensees should ensure the level of cover in this area is adequate, considering the premises may be closed for months rather than weeks depending on the level of damage.

“You should then look at the period of time the policy covers,” he said.

“In the worst case we have found that 12 months may not be adequate for you to return to the level of income enjoyed before the loss occurred. We provide an indemnity period of up to 24 months to allow adequate time for income to return to its previous levels.”

Whatever level of cover operators are looking for, insurance companies have warned licensees to be wary of under-insuring their business, saying that where the value of the premises’ contents is incorrect, an average is applied, which can mean reduced settlement payments.

Armstrong at Morgan Richardson advised operators to ensure values are checked when policies are being renewed to ensure they are adequate and account for any new equipment purchased, redecoration, etc.

Romero-Trigo at NDML agreed.

“Generally the more common mistakes operators make when purchasing an insurance policy is under-valuing either their buildings, contents or business interruption sums insured; this, in insurance terms, is called under-insurance and generally this only comes to light when a claim occurs,” she said.

“The application of average to a claim means that if you are under-insured when a claim occurs, the value of the claim would proportionally decrease by whatever percentage the sums insured is under-valued.”

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Insurance at a glance


  • Buildings insurance – this is specifically to cover damage to the building. If you own the building your broker will ask a series of questions that will help them understand the best way to insure the property.
  • Contents insurance – this covers contents including fixtures and fittings, equipment and stock against a range of perils including explosion, fire, storm damage, malicious damage and theft involving forcible and violent entry or exit from the premises. It also covers against the leakage of beer and beverages from pumped containers and subsequent damage to contents.
  • Employers’ liability – this cover can provide up to £10,000,000 for sums you become legally liable to pay as damages, together with your legal costs and expenses relating to an injury to an employee for which you are legally liable. Employers’ liability insurance is a legal requirement if you have any number of staff working for you in any capacity.
  • Public liability – this provides cover of up to £5,000,000 for sums you become legally liable to pay in respect of accidental injury to any person or accidental loss or damage to their material property happening in the course of your business or caused by the nature or condition of anything sold or supplied by your business.
  • Loss of money – cash is usually covered up to £3000. If you require a higher level there is likely to be security requirements, such as having a safe on the premises. Make sure you purchase adequate money cover and that this covers you during trading, when in transit and/or in a night safe when the property is unoccupied.
  • Business interruption (loss of profits) – this helps you stay in business by covering loss of gross profit and reasonable expenditure incurred as a result of an event such as a fire or theft. The indemnity period is the amount of time this cover can be claimed for. A ‘gross profit sum insured’ of £500,000-£750,000 with an indemnity period of 24 months is standard for a pub. It is possible to insure for 12 months but it is unlikely a pub could return to the same levels of trading after a full rebuild or refurbishment within 12 months.


Supplied by Towergate Insurance.