From Risk to Recovery: The Power of Insurance for Small Businesses

Several years ago, Tom and Steven started a small web-design business, SiteForma. Tom was responsible for growing and supporting their client-base, while Steven designed and built the websites.

Expanding to include maintenance of client databases and online shopping facilities, they bought new technical equipment and rented office space.

Recognising the importance of insurance, they sought professional advice about suitable cover for a small business like SiteForma.

Uppermost in their minds were the kinds of loss they needed to insure against, such as:

·       Property/equipment damage or loss

·       Key personnel

·       Cyber attack and ransomware

Any of these events could potentially lead to business interruption, security breaches and reputational damage, all of which may expose SiteForma to legal action.

With assistance from their planner, Tom and Steven conducted a business risk analysis and considered the following insurances:

Property and assets cover

SiteForma owned state-of-the-art equipment to manage its clients’ online operations. Property and assets cover would insure against equipment damage or loss resulting from fire, flood, theft, etc., the kinds of events that could potentially lead to business interruption and SiteForma being unable to fulfil business commitments.

Revenue insurance

This cover helps support a business experiencing loss of revenue or profits resulting from an event causing computer failure or business interruption. Cover is in the form of compensation to help keep the business operating during prescribed hard times.

Key person insurance

Tom and Steven are both integral to SiteForma’s operations and client account management. If either was unable to work due to illness or injury, the business could suffer considerably.

Insurance provides financial support enabling the business to engage suitably qualified people and systems to minimise the impact to SiteForma and its clients.

Professional indemnity

This protects Tom and Steven against liability for damages, occurring in the course of their business, and the costs associated with defending legal claims brought against them by clients.

Shareholder insurance

This specific type of life cover protects shareholders if something were to happen to one of them. It provides a lump sum payment enabling the surviving shareholder to purchase the other’s shares, at a previously agreed price.

It offers surety for an effective business succession plan if one of the partners was suddenly out-of-the-picture through death or disability.

Cyber insurance

This covers a business’s liability if subject to a data breach involving sensitive customer information, names, addresses, credit-card details, etc.

With more businesses storing data ‘in the cloud’ and functioning online, this form of insurance is increasingly relevant.

Tom and Steven’s adviser assisted them in understanding their risks and developing a contingency plan that included an insurance portfolio tailored to SiteForma’s specific requirements.

When a neighbourhood power surge knocked out SiteForma’s systems, it caused physical computer damage and disabled web-connectivity. Besides SiteForma being offline, its clients couldn’t access customer databases, potentially exposing SiteForma to legal and reputational damage.

SiteForma’s insurance provided financial support to quickly restore the business’s online connectivity and replace damaged equipment. Within 24 hours, SiteForma was returned to operation with minimal interruption to the business or its clients.

Every business is different and no one solution covers all. If you’re uncertain about insurance, speak to a qualified professional and get the most appropriate cover for your business needs.  

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