Contents Cover

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What is contents insurance?

Contents insurance covers your business against damage or loss to your company's belongings. This can include anything from a small computer to a 20ft long printing machine. Anything the business needs to function properly should be covered by a contents insurance policy. Contents insurance is not compulsory but often recommended if your company owns expensive items that may need replacing. Property is not classed as business content.

Why do businesses need contents cover?

Although you may already have insurance to cover your business premises, this usually only covers the buildings themselves and not the contents inside. For this reason you may also need to take out contents insurance if there is a risk that anything could be damaged, lost or stolen.

If you own a very small company and you only have small items that you carry with you, you may decide the risk is so low that you don't need to take out any cover. However if you store stock, machinery or equipment that is essential to the functioning of your business, you should have the appropriate contents cover so that if anything were to happen you can claim on your insurance.

There are two standard types of contents cover available:

• Indemnity insurance
• Replace as new

If you decide to purchase indemnity cover the insurance company will take depreciation into account when settling a claim. This means the amount you receive will depend on how long you have owned the product and/or the wear and tear rather than the amount you originally paid for it. An indemnity insurance policy will usually insure your contents if stolen, however there must be proof of a forced entry in order for this to apply.

If you take out a 'replace as new' insurance policy items will be valued at their price in the current market.

Another cover you may wish to take into consideration is a business interruption policy. This insures the company for any loss in profit that is the direct result of damaged or faulty contents.

How much cover should I take out?

The amount you take out completely depends on the nature of your business and the activities involved in the industry you work in. As an employer you need to discuss the likely events that could occur with the insurance broker to ensure you obtain the most suitable cover possible.

How much will contents insurance cost?

If the only contents you have are a couple of new computers your policy is likely to cost a lot less than a company operating old machinery or large pieces of equipment. The less risk your company involves, the lower the cost of your policy.

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