The right insurance solution for your business
Figuring out what type of insurance you need doesn’t have to be cumbersome.
You’ve moved to Tenerife and you’ve decided to open a small business… All your savings are now inside of your dream bar / supermarket / real estate agency / shop /restaurant… Your spouse and son are also working in your family business, and you have one or two employees, depending on the time of the year, number of tourists, etc… do you recognize this situation? Good, so this page was written for you.
- Have you though what can happen to your income if your business is robbed and all the hard-worked-weekly cash is gone for good?
- What if you’re only distracted serving a client and a fire starts in your kitchen, damaging a big part of your investment and hurting some of your employees?
- Can you really afford to have a running business and not be insured? The answer is no.
Unexpected problems can arise in any business, but with business insurance you can protect your financial investment should this happen.
Business insurance provides protection for your business' investments, property, stock and employees. Like other insurance products, business insurance policies should be tailored to fit the needs of your business and its operations.
It brings together several package covers like: General Liability, Product Liability, Workers' Liability, Water damages, Fire, Atmospheric Phenomenons; and optional covers like Theft, Business Interruption, Machinery Breakdown, Computers, Refrigerated goods, etc…
Building and contents - If you have purchased the property where your restaurant / shop is situated, then you have likely made a significant investment to obtain this asset. Once you have purchased the property, you then make many additional purchases to furnish the premises ready for your customers. With building and contents cover you can receive comprehensive protection of the property and contents. Including this coverage in your business insurance is a wise decision and this protection can easily be added to your policy. Building and contents insurance can give you peace of mind that you're fully protected for any loss or damage of both you items and business premises.
Shop / Restaurant / Bar equipment and fittings -If you have made extensive improvements to your local, such as fitting out the kitchen, a bathroom, building a bar and so on, then insuring these fittings and the equipment you may have purchased is another element to consider. Finding insurance coverage for customised fit outs and equipment can be done when you obtain a business policy. Having this protection can help to cover the expense of replacing any of these items that are essential for running your business if your fittings or equipment is damaged. Extending your insurance to protect against equipment failure is also an option; which is important when you risk further losses through scenarios such as food spoilage if your refrigeration fails.
General liability is mandatory and must be purchased for every business in Spain. General liability insurance covers any legal damages that may result from claims of negligence, injury and property damage. This coverage also protects your company for medical expenses and lawsuits. General Liability is selected in coverage limits. While large corporations may select a high limit of liability, smaller companies can choose a smaller package. Normally in the UK a small business like a bar, a shop or even a furniture warehouse have a business liability limit of a minimum of 1million Euros, while here in Spain these amounts are not common at all, and 90% of small and average businesses only hire a cover of 150.000€. Many reasons contribute for this enormous liability difference: the claiming culture is not so developed, Courts work slower and lawsuit and indemnization values are much lower than the UK.
Our Saving tip - if you own a small-medium business in Tenerife hire a liability cover of 150.000€, and not of 1 million euros like you would do it in the UK.
Product liability provides protection from injuries or damages that may result from a faulty product. Companies can be held liable if their product or service causes personal injury or damage, therefore it is important that you select this coverage for your business. Companies such as manufacturers, wholesalers, distribution companies and retailers often select this coverage. Liability for negligence, breach of expressed or implied warranty, defective products and defective warnings and instructions are insured under this coverage.
Practical example: you are the owner of a restaurant and by accident you serve an expired cheese sauce.… the morning after you have a complaint from a party of four with the respective medical expenses… The product liability will cover the medical expenses and eventually any indemnization that your clients require through a lawsuit.
Theft insurance and employee bonds can help protect your business from criminal activity. This coverage provides protection from acts of theft, computer hacking, vandalism, obvious general theft and employee embezzlement. It is important that businesses take the initiative to avoid such acts of theft. While criminal insurance is a key coverage to carry, it is not a required insurance coverage. This coverage is generally added to your business owner's policy as an endorsement.
Business Interruption Insurance
We live in an uncertain world, whether that comes in the form of severe weather, a natural disaster or something more ominous, businesses today need to be prepared for the possibility that something may cause them to shut down for more than a few days. Since few businesses can afford to continue covering operating costs without any incoming revenue, it's a good idea to purchase business interruption insurance to defray some of the expense.
Without knowing how long your business will be closed or for what reason can make it difficult to determine how much business interruption insurance you should carry. There are, however, some standard things to consider in order to figure out how much is needed:
Assume that in the case of a natural disaster or an unexpected debilitating event (such as a fire), your business will be shut down for at least three months. Ideally you'll be up and running way before the conclusion of that time, but especially in the wake of a widespread natural disaster, it may be difficult to rebuild quickly. Business interruption insurance is not like fire insurance or theft insurance. It covers profits lost while the business is closed for repairs, rebuilding or relocation.
Determine what type of coverage will be needed to keep you afloat.
There are typically three types of business interruption insurance: Gross Profit, Permanent Expenses, and the most used: Daily Indemnization- the Insurance Company will pay a certain amount for every workable day that normal business is interrupted. For example: 450€ a day during three months and you don’t have to present your financial records. So if you choose the methods of Gross Benefit or Permanent Expenses, be sure you always keep detailed financial records. Business interruption insurance will cover the revenue that would have been generated if your business had been able to stay open, but the Insurance company uses past financial records to determine what that income loss would be.
This type of cover is not for short-term business shut-downs. Most policies have a 48-hours waiting period before coverage becomes effective. Persue your annual financial records and get a sense of your annual net profit. These records will not only be needed by your insurance company, but you also should have an approximate idea of how much profit you make (and would therefore lose) during a typical year. Purchase enough business income coverage to cover at least this amount of revenue.
Other Endorsements you should consider: Refrigerated Goods, Machinery & Computer Breakdown
If you are the owner of a restaurant, bar or supermarket you will probably have from 3.000€ to 5.000€ of refrigerated goods kept in your freezers. What happens if tomorrow Unelco cuts the electrical supply for more than 24h? Who’s going to pay for all that food that went bad? Your Insurance of course! So do don’t forget to include this optional cover in your policy: you will be surprised to find out that the price of your annual business policy will only go up by a few euros and it will bring you peace of mind.
Another important cover is Computer and Machinery breakdown: if your business depends hugely on computer and machinery, you can insure them and your policy will cover any malfunction and also provide you with informatics assistance 24hours / 7 days a week!
As seen, business insurance can offer you and your business a wide range of covers that can prevent any misfortune. Knowing everything is well insured, you can stop worrying what can happen tomorrow and start concentrating in what you can do better: running your dream bar, shop or restaurant!
Your Zurich agency TVT, specializes in offering great tailor made business covers with affordable premiums. With a unique service, offers an English Business Consultant – Louise Hernandez (902 10 82 92) that can visit you at your business and will always offer professional service and advice. So why don’t you call him to discuss your business insurance needs, without any compromise?
For more information about the different level of Business Insurance in the Canaries call us on 902 10 82 92 for an informal quote or conversation.
TVT Office Director Adeje
Tel. 902 10 82 92 - Fax. 902 001 058