Business Insurance

Business insurance aims to remove the worry and financial hardship of unforeseen events.

There are 4 areas of business insurance:

• Key Person
• Business Succession Planning
• Buy/Sell Agreement
• Guarantor Protection

Business insurance is a specialised field. We can provide a detailed analysis of what is required and as advisors we can tailor a protection package to meet the individual needs of your business.

We will also work with you to understand your business needs and create a business succession plan.

We have to ensure the business is properly valued and the insurance level or funding plan is appropriate to your needs. We will then work with a specialist lawyer to ensure the documentation is correct and accurate.

Key Person Insurance

Regardless of what a business is worth in real estate, equipment and inventory, the biggest asset is its key staff — the people with the ideas, drive, initiative, skills and know-how who generate profits and ensure the business thrives.

Without these people the other assets are static at best.

Think about it: Is there someone in your team who would cause you stress if they suddenly needed six weeks leave?

Without him or her, will there be a negative impact on output, sales, access to markets, cost savings, reputation, or ability to service loans?

No doubt business owners are key people. However, there may be others in your team, such as financial controllers, computer programmers, specialist engineers, designers or other technicians who are vital to your business’ success.

The sudden loss of such a person has inevitable costs, not all of them obvious. As well as a fall in sales or profits until you find a replacement there will be recruiting, specialist training and familiarisation expenses. There is often a negative impact on your business capital value, goodwill and credit rating.

Key Person insurance covers the financial consequences caused if a key person dies, suffers a traumatic illness or injury, or suffers total and permanent incapacity.

About 98% of small businesses have their cars insured to cover potential financial loss. What about the financial impact caused by the loss of a person who is the key driver of your business?

Business succession planning

You have put in a lot of effort and personal sacrifice to run and build your business — watching the costs, making the right connections and getting the right people.

Much of your wealth is generated and often locked up in your business.

Should one of the partners in your business suddenly die or suffer total and permanent disability, what would happen to his or her share in the business?

Without business succession planning and without a formalised buy/sell agreement, one of the following outcomes may occur:

• The deceased’s estate may demand a payout of a size that will force your business to be sold
   
•  The heirs may insist on direct involvement in your business operations even though they may lack the necessary skills

This is what makes business succession planning so important.

Business succession planning is how you transfer business ownership to the right party at the right price with the funding provided.

Business succession planning minimises disruption and avoids the need for additional borrowing or asset depletion in what are already adverse circumstances.