Insurance for Small Business – an absolute must
08 April 2013
From starting a small business from scratch through to running the business on a daily basis, there are many tasks an owner must do and think about whilst trying to turn over a healthy profit. The sales margin is often their first priority, whilst everything else is pushed aside.
Many small business owners neglect or overlook the need for insurance, usually because of cost or time constraints, especially within the current competitive climate. Common concerns include the ever increasing costs of insurance premiums and rents through to the growing nature of online sales.
Whilst it can depend on the nature of your business and complexity of your insurance requirements, it is a good idea to shop around to find the right cover at the right price for your business. The first step is to make sure you have an adequate asset listing which has been valued using the correct definition of value. Where businesses skip this step they are at risk of being underinsured or facing a coinsurance situation.
O’Maras conducts insurance valuations for replacement, reinstatement and indemnity value bases. We cover all private property categories from antiques & art though to plant & equipment, motor vehicle, stock, intellectual property and much more.
A common question we are asked is what is replacement cost?
Replacement cost refers to what one might expect to pay for an object of similar age, size, colour & condition (2010 International Valuation Standards, Ninth Edition 2011) While accounts may report a written-down book value of your assets, it’s important to use the replacement value for insurance purposes. Furthermore, it is important to review the definitions within your insurance policy as this can vary across insurers. Some replace new for old others replace like for like. These policies often have an upper limit on the amount payable and unless you are aware of this, you could believe that you are better covered than you are.
We can assist accountants and businesses directly with their annual stocktake for insurance including a review of your asset register, as there may be surprising savings on insurance premiums. There are business cases where old obsolete assets have been reinsured and where the value has simply been indexed at renewal rather than a thorough assessment using the correct valuation approach. To find out more please do not hesitate to contact us regarding the value of your assets and join the conversation on Twitter and Facebook.