Cancelling your Business insurance? The consequences

OK, OK we all resent paying for insurance, yes even us! It goes on the wrong side of the balance sheet & the papers are full of how insurers don’t pay out when the Government locks down the whole UK and your business gets interrupted.

May I separate fact from fiction? Firstly, an insurance policy is a legally binding contract on both parties, so if you are insured, the insurance company has to pay.

So onto the second point, aren’t you insured for everything? No, no insurance policy covers you for everything. It doesn’t cover war, sonic booms, radiation, wear & tear and in most scenarios’, it doesn’t cover the Government locking down the streets so no one can trade with you.

I say most cases, because some very big businesses who pay £1 Million (+) a year in premiums do have this type of cover but sadly, most SME businesses do not have this type of insurance. Some do, but that is more by luck than by judgement, as my 38 years working in insurance have taught me that businesses do not want to pay anything for insurance, let alone for things they think are a) never going to happen b) will cost even more money to insure against and c) if they did happen ,the Government would help, right?

But what is dangerous is cancelling all your insurances as this may have unintended consequences.

Firstly, the obvious ones. Employers Liability has been compulsory in the UK since 1969 if you employ any person – and if they are furloughed, they are still employees. You can be fined up to £2,500 per day by the HSE if you don’t hold EL insurance so I would strongly recommend you don’t cancel your Employers Liability insurance.

Secondly, Motor insurance. You would have to have the IQ of a dead tortoise to not know that Motor Insurance is mandatory in the UK (and has been since 1930!) and these days with DVLA records linked to the Motor Insurance Database, it’s very easy for the Police & DVLA to know if a vehicle is, or is not, insured. You can be fined, have penalty points on your licence and even be banned from driving for failing to insure your car/van/motorbike/tractor so please do not cancel your Motor insurance!

Now onto the ones which are NOT compulsory but may cost you if you cancel – see part 2 (to follow in a few days)!

 

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