Is your insurance cover comprehensive enough? – Check these out

The activities of organizations involve not only opportunities but also numerous risks. Some of the risks can be managed with the help of insurance, and insuring some parts of the operation is even required by law in Finland. That's why every organization has to learn at least a little about insurance coverage - whether you want to or not. On the other hand, especially in larger organizations, you can completely get rid of insurance worries with the help of an external expert.
Hannu-Pekka Mäkinen 
Insurance Broker

Managing insurance is a complex and time-consuming job. As it should be in business, the greatest attention and energy must always be directed to the development of operations and the growth of the company. That is why the management of insurance coverage often gets too little attention, and it is not developed along with the rest of the business.

The insurance cover for the start-up phase is quite modest in most organizations. However, as operations grow, the importance of good risk management increases greatly. Even if in financially challenging conditions you would like to save on insurance prices and radically reduce the coverage of security, this can even be fatal for the organization in the event of an accident.

Business insurance is based on an individual risk analysis

The purpose of business insurance is to cover unexpected costs arising from the realization of various operational risks. Such costs can be, for example, the costs of replacing a broken production machine, or compensations to be paid due to damage caused to a third party.

Well-planned insurance coverage is always based on a careful and individual risk analysis, which takes into account the special features of the company's industry and business. Insurance coverage cannot be sold as an off-the-shelf product, because insurance must be tailored to the needs of each organization.

In the following, we will help you look at your own organization's insurance policies from different perspectives. It is worth going through the list point by point so that you can make sure that everything essential has been taken into account.

Property insurance

Property insurance is most often the basis of an organization's insurance coverage. It covers damages caused to the company's property, such as burglaries, fires or water damage. In case of damage, it also compensates for the company's "detached" assets, such as production machines, tools, computers, manufactured goods and office furniture.

When taking out property insurance, you should consider at least the following points:

Does your insurance cover all the necessary risks?

The most common options for insuring property are a combination of fire-crime-LVIS-natural phenomenon insurance and full coverage insurance. When your risk is carefully reviewed one by one, we also know how to take out the insurance to the right extent.

Does the insurance cover non-external damages?

Part of the property insurance cover only protects against external events. In this case, the insurance would not cover, for example, breakdowns inside the machine or device.

For this type of damage, insurance cover is also needed for internal breakdowns. Such extensive insurance coverage is a reason to take out at least the most important and most difficult-to-replace machines in production.

Business interruption insurance

Sometimes something unexpected happens that seriously hinders the business or even stops it completely. This means, in the worst case, that no money comes into the company at all, but expenses such as office space rent and staff salaries still have to be paid.

With interruption insurance, you can secure various risks caused by interruption of operations. When purchasing interruption protection, check at least these things:

What kind of business interruptions and costs does your interruption insurance cover?

A common misconception is that business interruption insurance protects against all interruptions, regardless of the nature of the interruption. However, the interruption insurance is linked to your property insurance, so in order to pay the interruption compensation, a property damage covered by the insurance must first occur.

Such damage can be, for example, fire or water damage, which leads to the fact that business operations cannot be continued normally.

There may be other interruption risks, for example

  • Breakdown of key machines. If the company has operationally critical machines, the insurance should also cover the situation where the machines are stopped due to breakdowns.
  • Epidemic suspension. Especially in the food industry, it is important that business interruptions caused by the epidemic are included in the insurance. The costs of disposing of, for example, contaminated food should also be included in the insurance coverage.
  • Information system interruptions. The majority of companies are currently dependent on a functioning information network or system. You can prepare for interruptions related to their operation with the help of cyber insurance.

Will the company be able to pay the additional costs caused by the interruption of operations?

Interruption of operations can often be more expensive than material damage. Interruption insurance protects against financial losses that you have suffered during the interruption period. The insurance covers the lost income, but also the extra costs that arise when the loss of income is prevented by organizing the business in alternative ways. The salary costs of the interruption period can also be covered by interruption insurance.

Do you have business-critical customers or suppliers?

Interruption insurance can also cover dependence on partners, such as customers or subcontractors. If a partner has a fire that hinders the business and this results in a financial loss for you, the insurance can cover this lost income.

Liability insurance

Liability insurance protects against damages that your company or its employees cause to external parties or, for example, customers and partners. The liability insurance also covers the costs incurred in settling your liability for compensation. Liability insurance covers not only property but also personal injuries.

How to determine the right insurance amount for liability insurance?

In Finland, a fairly common insurance amount is EUR 1,000,000. However, the insurance amount should be evaluated from the starting points of your own business.

What kind of work is done and in what environment?

Serious personal injuries can be large in terms of compensation, so attention should be paid to them as well. A smaller insurance amount is certainly sufficient for planning work done in your own office than, for example, for electrical installation work done in an industrial plant.

What requirements do your customers have?

Some customers may set requirements for the company's liability insurance. In the contract phase, it is defined what kind of liability insurance you must have if you want to get the task in question. Already at the time of the contract, it is good to find out and think about what conditions your company can commit to in terms of liability insurance.

Legal expenses insurance

Disputes can arise in very different situations. Work done may not be paid for, damaged property may not be replaced, or disagreements may arise over the content of contracts.

Disputes cause costs, and they may become large as the processing of the case drags on. Legal protection insurance covers legal costs and gives you a sense of security to defend your own rights in disputes. Legal protection insurance creates security not only in disputes but also in criminal cases.

Ask yourself the following questions when taking out legal protection insurance:

Is the sum insured big enough?

Since legal costs can become high, it is important to assess what kind of risks your own activities involve in terms of disputes and what kind of insurance amount would be sufficient.

What kind of disputes does it apply to?

Check what kind of disputes your insurance covers.

In which region is the insurance valid?

It is important to make sure that your legal protection is valid throughout your area of operation. In this way, you avoid being left without compensation if a dispute arises elsewhere than in the area of validity of the insurance.

Who takes care of notifying your insurance company of the changes?

As a policyholder, you have a reporting obligation. This means that you must notify the insurer of any significant changes in your business. This can mean changes in turnover, updating inventories, investments in fixed assets or new business directions.

If you don't take care of reporting, you may be underinsured in the event of an accident, and you may not receive compensation.

An insurance broker helps in putting together the right insurance coverage

Only a few general insurance policies have been described above. The company's need for insurance is always determined by the company's individual risk profile. Ready-made package solutions rarely work and there are many differences in companies' risks even within the same industry.

For this reason, it is good to take the help of an insurance expert, i.e. an insurance broker, who is independent of insurance companies. An insurance broker promotes your interests and helps you compare different insurances and insurance companies in terms of both the price and the content of the insurances.

In some cases, it is worth spreading the insurance cover over several companies in order to obtain the best and most cost-effective cover. Based on the comparison and risk analysis, you ensure that your business is well secured in any situation.

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