Make Your Insurance Work For You

With business insurance rising, many companies are looking at ways of reducing the cost of making a claim and controlling their spend on their policies.

Traditionally companies making a claim instructed the solicitors who acted on behalf of their insurers but today we are seeing an increasing trend of businesses choosing to use their regional business lawyers to act for them. They get a more responsive service, more in tune with their business approach and better value for money.

Businesses are also looking at their type of cover, whether they should increase the percentage of risk they "self insure" and handling claims arising from this "excess" through their own staff and systems. This can reduce or maintain their premiums and give them greater flexibility in how they handle lower value claims.

All businesses, whatever their size, face a common set of risks. Injuries to staff, customers and the general public, as well as random events such as fire, flood and theft, can lead to serious and damaging losses.

Legally every business must have a minimum level of insurance. Most businesses must have employer’s liability cover which protects them against claims from employees for accidents or sickness suffered as a result of their employment.

Company motor vehicles on the road must also have at least third party motor insurance covering a business’ liability for personal injury to someone else or damage to property. You may also want to purchase comprehensive insurance to cover damage to or theft of your own vehicles.

If your employees use their own vehicles make sure their insurance covers business use. If it does not then you may find a third party claiming from your business on the basis that your employee was in the course of his or her employment with you when an accident occurred.

Businesses in certain professions, such as law, accountancy and financial services are also legally required to take out professional indemnity insurance. This protects them against legal liability for losses suffered by customers as a result of negligence.

Beyond these are a whole range of other types of voluntary insurance that are a good idea, such as public liability and product liability cover.

Further policies which may be sensible include key person insurance, business continuity cover etc. Knowing where to draw the line can be difficult and speaking to a competent adviser is essential.

Self insurance may not always be a practical option for a small to medium size entity (SME), but many bigger companies now self insure where cover is not compulsory. Some claims do not need legal action but in others solicitors still need to be instructed to handle the claim on their behalf. Businesses can choose to use the solicitors who acted on behalf of their insurers or the lawyer of their choice.

For more information contact Kelvin Farmaner, partner and insurance specialist. Recently ranked as a Leader in his Field in the independent legal directory, Chambers UK 2009.

Published 11/12/2008. The author of this article is Kelvin Farmaner