Comprehensive cover for loss or damage to commercial buildings and business contents including tools, equipment and machinery is essential to survival of a business.
But many business operators are under the illusion that this business property cover will solve all of their problems in the event of an insured loss.
Damage to or theft of a key item to the business operations may be covered by insurance but there may be productivity consequences that critically affect the continuity of the business well into the future.
Productivity failures as a result of uninsured (or uninsurable) losses to the business can be averted through the implementation of strategies to manage the risks.
Knowing the options and limitations of your business insurance cover is as important as understanding how certain property losses or damage might impact on operations including potential downtime.
Stolen equipment can be reinstated through your insurance. However in the days, weeks or months that it may take to source and replacement equipment, the is potential for the loss of valued customers due to orders shipping late - or workers becoming disenchanted because of their dependence on the stolen equipment to enable them to do their jobs effectively. This could be game over for some businesses if not anticipated and well-managed.
Any loss to your small business's productivity or cash flow in the short term can also have long-term consequences and are well to be avoided.
Maintaining a comprehensive business insurance plan is your first option when looking at ways to minimise the risks to the business. It may be that your insurance policy can provide more protection than you anticipated in areas like covering losses caused by downtime.
To decide on the most appropriate insurance options to your specific business needs it is recommended that you talk to a licensed insurance broker.
When talking with your broker, it's worth finding out about policy excesses to ensure that your business will be in a position to raise the necessary cash when the need arises and in a timely fashion.
Make sure that you understand the terms and conditions of your policy now - so that you can anticipate what you are likely to expect from your insurance in the event of a claim - and prepare for the other consequences that a particular loss may cause to the business
You can then address these risks by drawing up a risk management plan.
Planning for the minimisation of risk and implementing your business risk management plan should result in lower overall operating expenses over time - making you more competitive and more profitable by keeping the equipment running and satisfying all stakeholders.
A simple audit of the things that could possibly go wrong around the workplace - and their likely impact on the business - can also expose risks that can be eliminated altogether quickly and inexpensively by making small changes or corrections.
If you want to reduce the financial risk to you and your business, have a plan to deal with downtime.
A better appreciation of where your business might be exposed can help you identify areas that may be discussed with your broker for inclusion in your business insurance policy.
Please note that some of our calculators may use assumptions that are not necessarily applicable to your current specific circumstances and we therefore cannot always guarantee their accuracy. You should always seek professional financial advice from a licensed professional before proceeding with any financial recommendations.
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