Don’t get haunted by a “ghost from Christmas past”

The current economic climate dictates that some business owners will be looking at downsizing, ceasing activities in certain areas, or even closing down completely.

 

When financial pressures are acute, it is very tempting to try and cut unnecessary costs, and keeping insurance cover in place for activities that are no longer carried out would appear to be a waste of money. 

 

However, if you are a sole trader or a partnership, selling a business but not the company, or simply closing down completely then ceasing insurance cover for these activities could be a costly mistake.

 

When a company is sold, the new owner would normally take on all liabilities past or present.  The vendor can then walk away knowing that – provided the solicitors have done their job well – there should be no future issues which will cost money.

 

However, it may be unwise to cancel all insurance cover immediately, as you or your company could still face claims in the future from past activities, and special cover may be required to protect you against potential long term liabilities.

 

For example, a product you supplied some time ago might cause injury, some work you carried out may go wrong or some advice you have given may turn out to be incorrect, and there is a risk that your current insurance policies cover existing business activities, but your insurer is not aware of past activities. 

 

If you have closed down a division, stopped producing a certain product, changed the nature of your business or stopped exporting to a certain country, then you need to ensure you are adequately protected against claims in these areas.

 

If a liability claim arises from defunct activities, then your current insurer could well refuse to handle this.  However, the issue is simple to resolve, as it is just a matter of telling your insurer up front of any past changes.

 

BiB Insurance Brokers are Spiral’s specialist insurance broker and can offer advice and quotations on a wide range of insurance policies.  If your business insurance policies are due for renewal and you are concerned that you may not be adequately covered, BiB will be happy to advise and offer a free, no obligation quote.

 

If you would like to be put in touch with a BiB representative to discuss your requirements, then contact us here at Spiral.