What kind of cover do business owners need?
Most business owners are prepared when insuring their plant, equipment, vehicles and buildings. They understand the dangers of fire, earthquakes, floods, or other business interruptions.
But what about your human assets? Who protects you as the business owner or shareholder if external events divert you from business as usual?
The risks are costly. You could suffer a significant financial loss, or even have to close the business down if key people passed away or become disabled and unable to fulfil their role. You could end up in partnership with the estate of your late business partner (whose priorities might be very different from yours), or suffer significant impacts to your revenue.
Please speak with us about smart ways to manage your financial exposure.
Protect your key people – protect your business
A ‘key person’ is someone whose ongoing involvement enables the business to succeed. It’s not just about owners and managers – it includes everyone whose expertise cannot be easily replaced. For instance:
- Managing Director with deep knowledge of operations, customers and markets.
- Sales Director with critical contacts and networks.
- Skilled professionals, such as engineers or software developers with hard-to-replace IP.
- Silent partner, whose reputation with financial institutions provides access to funding on the best terms.
These are just examples – the key people will be different in each business. What matters is identifying the risk, putting a dollar figure on it, and insuring against the possibility that you may lose access to their skills.
There are many different factors in ensuring business owners quantify the risk with their key people. We can discuss strategies to mitigate it. Once we’ve identified your ‘key person’ risks, there are a myriad of solutions in the market that enable us to look after your unique needs.
Insurance that protects your interests as a shareholder
Partnerships and companies pool the talents of individuals to create something greater than the sum of their each person’s contribution. This can be a great way to build a significant asset.
Sadly but inevitably, shareholders sometimes pass away, get sick or decide to focus their attentions elsewhere. That’s when you can lose certainty and control of your business.
You could find yourself in business with your late partner’s bereaved spouse as a business partner. He or she might have different priorities, such as extracting cash while you may want to invest. Or perhaps they want to sell out – and you do not have the money to buy their shares.
These risks can be minimised with a well-designed shareholder agreement, including clear funding or cost-effective insurance arrangements.
We can help you scope the risks, calculate the costs and create a fund, such as a buy/sell agreement to provide for transfer of ownership following the death, disability or critical illness of a principal.
It all starts with advice
Business cover will always be bespoke. So we will listen carefully, ask questions and help you find the best way to protect your human assets.