Home' Trinidad and Tobago Guardian : September 12th 2013 Contents One of the golden rules to
remember when arranging
insurance for your business
is: What you do not insure
is funded by you or your
business (capital). This
means that you should always insure those
things that are essential parts of the business
that the business or you could not afford to
replace should they be lost, stolen or dam-
You also need to make sure that you insure
against the business causing damage or injury
to other persons or the property owned by
For example, a business owns the following
• Buildings $1,000,000
• Contents $300,000
• Stock $250,000
• Business Income $500,000
• Laptop $5,000
If the business was going to leave anything
uninsured, then it would be the laptop.
Most businesses could afford to replace a
laptop if it was lost or damaged as long as
they backed up the data daily and stored it
in a safe place.
The business would usually struggle if it
had to use its own funds to buy new buildings,
contents or stock. It would definitely struggle
to replace its business income if it was not
trading due to fire or other major loss.
On top of this, the business must always
make sure that it has arranged insurance to
protect it against injury or damage to other
parties, or to their property, where a major
injury could cost the business millions.
SEPTEMBER 2013 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
COMMENTARY | BG27
In short, always arrange insurance for the things
your business cannot afford to pay to replace out of
its own funds.
Once you are comfortable you have achieved this,
insure the smaller items if there are still funds available
in your insurance budget.
A qualified insurance adviser will be able to assist
you to identify the types of insurance cover your busi-
ness should not be without.
Remember: if you cannot afford to replace it with
your own funds, then it should be insured.
You will find that you will receive much greater
peace of mind once you know for sure that the assets
you cannot afford to replace have been insured for
their replacement value.
I will go on to talk about this in more detail in a
later article, but business interruption cover or loss of
income, as it is sometimes known, is one of the most
important insurance covers and yet it is the one that
it is rarely insured in T&T.
In other parts of the world, there are many statistics
available relating to reasons why most business owners
go out of business following an incident. You may
think that a major fire or storm or theft might be the
reason, but no. The real reason is actually the inability
to continue trading and the resultant loss of income.
You can always replace things like buildings, contents
and stock relatively easily. However, not being able to
sell your products or services and receive income for
them is another issue. If you cannot offer your goods
or services to customers who are looking for them,
then the customers will go to one of your competitors.
Once they go to one of your competitors, then it
is going to be very difficult to win them back, especially
if you are unable to trade for some time. The longer
they are with your competitor, the longer your com-
petitor has to make a good impression.
If you lose customers and cannot replace them, then
you are going to lose a serious amount of income that
your business could ill-afford to lose.
You may only have a sufficient amount of cash or
capital available and so if funds are running low and
your expenses continue to run higher than your income,
then you will eventually be forced out of business.
Business Interruption insurance can protect you
here. This will give you back the income you lose and
be capable of putting you back in the same financial
position you were in before the incident occurred.
Insurance companies carry out investigations into
your accounts and trading data following an incident
and from this, they will be able to determine how
much you would be entitled to.
If you didn t want full loss of income cover for any
reason, then you may wish to cover what is called
Increased cost of working or additional expenses only.
This does not provide you with the loss of income
protection, but will at least give you cover for certain
things that you can do in order to keep your business
going and reduce the likelihood that you will lose
Some examples of aspects that could prove vital are
the additional rent for temporary premises, outsourcing
of manufacture to a competitor or contract manufac-
turer, an advertising campaign to win back lost or dis-
gruntled customers, the hire of temporary plant and
or equipment, overtime payments to staff, the tem-
porary employment of additional staff.
The key here is that the additional cost incurred
MUST be "necessarily and reasonably incurred for the
sole purpose of avoiding or diminishing the reduction
With all types of insurance, having peace of mind
will give you more time to focus on growing your
Next week: Basic insurance covers.
Mike Byrne ACII is the head of general insurance
at CIC Insurance Brokers Ltd. Send feedback to
To insure or not to insure
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