Business Insurance

You might think that having an array of insurance covers such as public liability, professional indemnity, vehicle insurance and management liability mean that your business is adequately protected.

The reality is that those policies provide no protection if one of the business owners or your key staff suffer from ill health and can no longer work in the business.

When we talk business insurance we mean protecting the value of your business through buy/sell agreements and associated insurance and key person cover.

Why should you have a buy/sell agreement in place and where does insurance fit?

A buy/sell agreement can be a useful tool for businesses that have multiple owners. The agreement will determine what happens to their shareholding when one or more partners exit the business. The business partner could be exiting the business for any number of reasons but a typical agreement will address the following circumstances:

• The retirement of a business partner
• The breach of a shareholders agreement or conviction of a criminal offence by a business partner
• Death or total disablement of a business partner

If the reason for the owner exiting the business is death or total disablement then this is where insurance can play a part. If you have life and TPD cover in place over each partner with cover equal to the value of their shareholding then the insurance policy will provide the funding mechanism for buying out that partner’s shareholding. The money is paid to their nominated beneficiary, or Estate, and in return the ownership of their shares is transferred to the remaining partners.

The key aim of any buy/sell agreement is to minimise the impact on the business of a partner leaving that business.

Funding the agreement using insurance ensures a quick and easy transfer of the business at full market value.

Do you need key person cover?

The success of a business is determined by the quality of the people in it. If you own a business that has key staff members that you can’t do without then you should consider key person cover.

The loss of a key person can be catastrophic for small to medium size business not only in terms of revenue generation but they may have special skills or knowledge that are not easy or cheap to replace.

Having cover in place to provide the business with financial security in a time like this is imperative. We can help you determine appropriate levels of cover and structure the policy correctly.