Commercial insurance policies should be written in plain English. That’s the theory of course. In practical terms it is fine line between dumbing down the wording too much and having it so that people can read the policy.

An insurance contract must contain certain terminology because, in the event of a court case, the wording has to have meaning.

To be fair, policies are much easier to read an understand than in years gone by.

Many insurance terms used to be in Latin, insurers and insurance brokers do mention these terms and it is helpful to know what they mean.

One term is “ab initio”. An insurer may choose to cancel a policy if a material fact has not been disclosed, for example, a driver has not disclosed speeding convictions. In business insurance, it may be because previous claims have not been declared. Ab initio means simply, form the beginning.

The importance of declaring all information at the outset is vital. Most policies that are cancelled ab initio are done after a claim has been submitted. The insurers will cancel the policy and return the premium paid and, will refuse to pay the claim.

Anyone that owns a car knows how easy it is to buy insurance nowadays, if you have internet access or a phone of course.

Most car insurance companies will have a website where you tick a load of boxes and put in what you think is the correct information, you get a quote and buy the policy. There is a risk of course that you mis-read one of the questions and 3 years later have a claim which the insurers say is not covered because of some tiny sentence in the small print.

Because it appears so easy, you can get complacent, particularly when great savings are on offer. The same will apply to business car insurance. If the car is owned by or has a lease in the name of the business, you must have a specialist type of policy.

Cars used for business tend to do higher miles, they travel during peak traffic times and whether we will admit it or not, they are not cared for as well as a car that you own in your own right. For this reason, business car insurers charge higher premiums and sometimes have more onerous conditions than a domestic car insurance policy.

You will need to be extra careful that you arrange a suitable policy because the last thing you or the business wants is a claim repudiated, or turned down, because you did not have a suitable policy. It is a false economy to buy a policy that is not suitable because insurers can be tough and if you have declared information (at inception) they will rely on that to deny you a claim.

Public liability under a salon insurance package policy will need to cover beauty treatments. The range of treatments available grows by the week and some insurers are struggling to keep up.

A basic hairdressers insurance policy can be extended to cover ear piercing and other “light” beauty treatments. There are two main categories for insurers, those involving application of products to the skin, including massage, and those where the skin is punctured, or invasive treatments or laser treatments.

Most hairdressing policies will extend to include ear-piercing as long as it is using an approved ear piercing gun. That is as far as the invasive cover goes. Anything else would need to be covered under a specialist beauty salon insurance policy.

Just because you are providing wider treatments, it does not mean you will have to pay an exceptionally high premium. It is, as with many businesses, simply a case of finding the right supplier for the product you want at the most competitive price.

There are a few insurers, such as Groupama, who have an excellent package policy that will cover beauty salons. You need to speak to an independent business insurance broker to buy a policy, but you will still be able to get a reasonable price.

The key is to declare all of your treatments and all those that you plan to do.

In England and Wales, buildings can have a listing or preservation order applied. The property will be either Grade 1 or Grade 2 listed, in Scotland the listing is A or B.

If you are arranging commercial buildings insurance, you need to ensure that your policy notes that the property is listed. Grade 1 or Grade A listing is the most onerous. What this will mean is that if the building were destroyed, say a fire, then this would need to be rebuilt almost exactly as it was prior to the loss, both inside and out. A Grade 2 or Grade B listing is not so detailed and may just apply to the frontage of the building.

What this means is that the rebuilding cost could be substantial. An office building, for example, may cost £250,000 to rebuild in modern materials. If however it is Grade 1 listed this figure could be many times higher.

Insurers don’t mind underwriting these types of properties, but what you must ensure is that the sum insured is adequate. If necessary, you may need to get an independent surveyors report to give you this figure. If it is Grade 1 or A, you may be able to get a figure, or at least an idea, from the National Trust as they will have undertaken a detailed survey before applying the listing order.

Running a pub, wine bar or inn is difficult, whether this be a tied, leased or wholly owned business.

There are so many things to think about, one area that sometimes gets neglected is making sure that you have suitable pub insurance cover in place.

Every licensed trade outlet should of course have insurance in place. The only legal requirement is employers liability insurance, however most commercial insurance companies have packages for this type of trade.

Within these packages you can insure your stock. Most insurers will split this stock into up to three categories. Wines and spirits, beers and food stocks. You should insure for the maximum replacement cost of these three items. The best process is to go through your last 3 stock inventories to see what the most stock is you will have at any one time. This is the amount you need to insure for. Speaking to a specialist business insurance broker is your best bet as they will search the market and compare business insurance quotes for you, and this process is all free! The broker only earns their commission if you choose their recommendation, it is therefore in their interest to offer you the best deal for the best price.

Looking back 20 years or so, if you wanted to buy something you would go to a local shop (as long as it was not early closing Wednesday!) and buy what you needed. The level of choice was significantly less than it is today. You had the option of buying mail order, although you usually had to send a self addressed envelope to get a catalogue and then send off your order with a cheque. The whole process took a while.

Nowadays of course we have the world wide web. Whilst buying something is not instantaneous, as it still needs to be posted or delivered, you can usually get your item on the next business day.

Traditional shops of course still exist but we are seeing more and more internet retailers. To all intents and purpose, these shops operate the same as a high street retailer except you do not visit their premises. This means that they still have a requirement for a suitable shop insurance policy. They need to insure their stock, contents and liabilities. Some commercial insurance companies still live in the dark ages and will not insure an internet retailer, whether they operate from an industrial unit or a home address.

You need to be careful to declare all of your business activities and most important, make sure that your policy documents state that you are an internet retailer. Do not be fooled into just buying a shop insurance policy, you may find this a costly mistake if you have a claim and the insurer says that you have failed to disclose a material fact.

Insurance for importers, exporters and wholesalers will need to include products liability cover.

This type of cover comes into play if you have a claim made against you for any injury, illness, disease or damage that has been caused by one of the products you supply.

In UK law it is immaterial whether you manufactured the item or not, as long as company A purchased from company B, then a financial relationship exists between the two entities. Therefore, if company B’s products caused injury, company A will have the right to sue them. Now company B could be a small importer who gets their products from all around the world. However, they need to make sure that they have a suitable wholesalers insurance policy in force that gives them products liability, as well as other covers.

There is an increased difficulty if you are also exporting. Claims costs in the United States of America and Canada are traditionally 8 to 10 times higher than in the UK. Most of this goes on legal costs (as ever) but what it means is that some business insurance underwriters will not include cover for North American exports.

You have to make sure that you declare to your insurance broker the estimated percentage of your exports that will go to the US or Canada. Otherwise, you could find your business in a very precarious position without this cover.

Business insurance companies rely on a certain element of loyalty from their customers. Whilst many will offer you savings on your policies when you take them out, they look to recoup the savings by increasing your premiums in future years.

They hope that you will not look around for alternative quotes. Whilst they may think this is all about brand and customer loyalty in many cases it is because the small business owner simply does not have the time to gain alternative quotes.

We can guarantee that over 90% of businesses, if they presented their insurance details to their current insurer as a different business would receive preferential terms. Why? Because insurance companies always have and always will operate a dual pricing system.

Whether it is pub, hotel, restaurant, commercial property insurance or any other business insurance related product, insurers always “buy” in the business. They offer better terms to tempt you to move to them.

But this can help with purchasing small business insurance and larger commercial insurance. The way it can help is if you set aside some time, at least 2 to 3 weeks before your renewal, you can get a better deal every year. Of course, if you have a bad claims record or some other problem you may not make a saving, however just by setting aside a small amount of time each year, most businesses will be able to make that saving.

The Motor Insurers Bureau has announced that a whopping 20% of drivers aged 17-20 are driving uninsured. The MIB, which is funded through a levy on motor insurers, pays out to those injured by uninsured drivers.

This message, unfortunately, is one that is similar, although not in size, for house, travel and business insurance. As times are tougher and spending is not as easy, many people are cutting back in their insurance. There is not a problem with this, as it is a personal choice. Not one we would recommend though. House and travel insurance is not compulsory by law. Your mortgage lender may insist on you having buildings insurance in place, but unlike third party motor insurance it is not illegal.

So, how does this affect small business insurance? Businesses that buy insurance are taking a sensible step to protect their assets. It is only if they have employees (who do not have to be paid and can be voluntary helpers) then they must have employers liability insurance. When we say must, it is a legal requirement. A business can be fined up to £2,500 per day that they do not have this cover in place.

It is difficult to estimate how many companies trade without commercial insurance. Businesses move, trade from home and changes names so a central database is difficult. However, a straw poll of insurers and workers in the broking community confirms one fact. Increasing numbers of business are cutting back or cancelling their insurance.

Although this may be an immediate cost saving to the business, with a bit of time and care they will be able to source alternative insurance at a cheaper premium. This surely has to be the better option for the business.

The vast majority of UK businesses, whether operating from a shop premises and office or an industrial premises will rent or lease the building that they trade from.

Having leased premises ourselves, it is very rare to look at a premises where they are in perfect, move-in condition. Usually, some work will have to be done to the property to bring it up to the standards you want to be able to work effectively and to project the image of your brand or business.

As a result, businesses will tend to improve the building. For example, a hairdressing salon could spend money putting in laminate flooring, specialist lighting and sinks/mirrors. An office may spend money installing specialist lighting and fixed computer cabling. All of these improvements are ones that, if the business were to move on to another premises, wouldn’t or couldn’t take with them.

The tenants improvements do not belong to the landlord or building owner and need to be insured by the tenant. Most business insurance policies will have the option of insuring tenants improvements. As they are permanently attached or fitted to the structure, the tenants improvements is usually an addition to the building insurance section.

It is worthwhile checking your commercial lease to see to what extent you are responsible for tenants improvements. What we mean is that if you move into a building that has tenants improvements from a previous tenant, you may need to insure them.

Most shop insurance and office insurance policies will need this type of cover. As with valuing your business assets, the best process to go through is to add up how much it would cost to replace all of the tenants improvements, add 20%, and then ask your insurance broker to make sure this is covered on your policy.

The good thing is that the rating applied is relatively cheap. For example, a commercial insurance premium would only increase by around £40.00 per annum to add tenants improvements. There are of course caveats depending on the type of trade undertaken, previous claims history and the area in which the risk is.

Professional advice is always available, for free, from a good commercial insurance broker. Call one up and get them to find some quotes for you.