The Public Liability Insurance Blog

How much trade are you losing?

I’ve worked in a couple of call centres before and I’m not sure if it’s just managerial bluster tempered with wishful thinking, but if the systems ever went down, the team leaders knew exactly how much money the business was losing as a result, almost by the second.

cashOnce the diallers stop working, the internal sales-meter starts ticking away, ready to be filed off on a spreadsheet as a reason for why the quota has not been met for the month and fed back to someone who might then be inclined to give the IT department a hard time.

Although I suspect these estimates as to how much the business loses every time Windows decides to update are slightly exaggerated, there is a lesson in this for any small business owner. Are you aware of how much your business loses if you are prevented from trading?

dollar face palmFor something that is not your fault, as part of your business insurance alongside public liability insurance and employers’ liability insurance, you can be protected by business interruption. The way most people think about this cover is in relation to their offices burning down, exploding, flooding, or other extreme incidents, but the cover actually scales down a lot further than that. Business interruption is calculated from your gross annual turnover and can be claimed for any period of time longer than 30 minutes.

(As a quick aside, to the right is this week's "stock image of the week". I know it's only Tuesday but I don't think I can beat this one.)

As an example, something like a power cut that lasts more than half an hour might be something you want to claim for if you lose business as a result (obviously not in the event that you haven’t paid your electricity bills of course) and in a similar vein, something that results in you having to send your staff home for the day such as a heating system malfunction could also be something you want to claim for.

Everyone gets stopped from trading every now and then and sometimes its just par for the course, but there is no point in you suffering in those instances where it is the fault of a third party entirely.

To see if business interruption is something you might be interested in, sit down and try and work out what sort of revenue your business generates in a day and then see if you can break that down further to an hourly rate. If that starts to look like a significant potential loss, then it might be time to investigate your insurance options.

Written by David Hing for YOUR Insurance, a specialist in public liability insurance for small and medium sized businesses involved in several trades and professions.