SME Business Risks

What are they?

Small to medium sized companies face unique risks if an owner and/or key person dies prematurely or suffers a serious illness or injury that prevents them being able to fulfill their normal role in the business.

These types of cover are often ignored while a business owner is usually careful to keep plant, building and stock insurances up to date.  However, the sudden loss of an uninsured business owner, who is often also a key person in the operation, could be more catastrophic and result in the early liquidation of the business.

Insurance covers for business owners should be considered in conjunction with other risk management processes.   Excellent systems, succession planning, and “back-up” personnel are some factors that can minimise the levels of insurance cover required.

Types of Cover Available

There are some specific “business” products that apply in the event of the loss of a Key Person, such as

  • Loss of Profits cover
  • Business Overheads cover
  • Locum cover

In addition Death, Permanent Disablement, Income Protection and Trauma cover can be used for business ownership protection provided they are structured correctly in accordance with legal and accounting requirements.

Particular Benefits of SME covers

Business owners and their families can be guaranteed to receive fair value for their share of the business.

Fire sales of assets can be avoided

Business liquidity can be maintained in a crisis in the event of the loss of a key person

A departing owner, or his Estate, has no ongoing debt or personal guarantee commitments