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How to buy

Getting the right amount of cover at a competitive price

Every business knows it needs insurance. But it's not uncommon for companies to buy too much cover, or too little. That means they've either spent too much, or don't have the protection they need. The worst situation of all is when a business thinks it's covered adequately, but actually isn't. All too often that doesn't come to light until something goes wrong - and by then it's too late.

Performing a risk assessment will help ensure you get the right cover for your business. Combine this with a good broker and you will get the right protection at the right price.

Don't scrimp

Quote�If you under-insure, your claim will be reduced.�End Quote

Don't scrimp on your cover. If you under-insure, your claim will be reduced by a similar proportion. For example, your claim will be reduced by 10% if your cover was 10% less than it should have been. This has caught out many businesses before, and will probably continue to do so - don't let your company be one of them.

There are some other key things to know when talking to a broker and arranging your insurance:

Always insure your assets for their cost price. If cost prices vary, make sure you have cover up to their highest levels.

Get protection against inflation and sudden increases in the value of your stock, equipment or liabilities.

When calculating all cover requirements, always allow for projected business growth. For example, set your business interruption cover for your anticipated profit at the end of the insurance period, not the start.

Make sure you are fully aware of the terms and conditions of your insurance. Nobody likes getting caught out by the small print.

You must disclose everything 'material' to your application. If you don't, you may invalidate your cover and not be able to claim. For example, tell your broker and insurer about past thefts, bankruptcy or insolvency, or if an insurer has refused to cover you in the past. Your broker or insurer will usually ask you specifically about these things.

Most policies require a minimum level of security. For example, you may have to upgrade your locks or install a burglar alarm according to your insurer's specifications.

If your company is a larger business then your insurer may send a surveyor to assess the risks accurately and to recommend improvements before giving you cover.

Every insurance policy - even 'all-risks' policies - have exclusions. Check what yours excludes carefully before you commit. It's common for things like equipment failure due to wear and tear, shoplifting and subsidence to be excluded. If these are high-risk areas for your company then you definitely need to talk to a broker for advice about your circumstances.

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Where to buy

Quote�You need a policy that caters for your individual needs.�End Quote

When buying insurance for your business, it is always a good idea to get professional advice. Every business is different, so you need a policy that caters for your individual needs. There are a number of places to get advice.

You can deal directly with an insurance company, either through a face-to-face representative, or over the internet. This option may suit a small business with straightforward needs, provided, you understand exactly what insurance you need to ensure you get the cover you require. If in doubt, you should consult a broker.

Professional brokers can recommend suitable policies after checking the products of a variety of providers on your behalf. Some will receive a commission if you buy from them, while others will charge a fee.

Finding a broker

One way of buying insurance is to purchase through a broker. If you haven't already found a broker to help with your business requirements, you can find a general broker in your local telephone directory.

However, please feel free to call 0115 948 7019 to discuss your needs with The Business Risk Solutions division of Lockton Companies, a specialist small business insurance broker who can give relevant advice as well as providing you with the cover you need. You can also email your enquiries to brs@uk.lockton.com.

What next?

You can get helpful advice from industry bodies like the Association of British Insurers.

Think you're paying too much for your insurance at the moment? See how to cut your insurance costs.

Ask yourself these questions to ensure you have the cover you need.

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