1) Why Do Businesses Need Insurance?

The purpose of Commercial Insurance is to cover your company from risks that face the business on a day to day basis, whilst undertaking its business activity.

Having business insurance in place enables the company to trade; if it had to set money aside itself to offset any potential risks that may happen to the business i.e. fire or liability claims, then there would not be enough working capital in a business to enable it to trade.  By purchasing insurance cover, a company can offset the risk of a potential claim being made against it to an insurance company, in return for the payment of an agreed premium.

The bottom line is that without insurance cover, many business people would not take the personal risk of setting up a business and without businesses, there is no trade or jobs.

2) Is Business Insurance Compulsory?

The following types of Commercial Insurance are mandatory for many organisations; if you are in any doubt about whether or not you must hold insurance, then please call us.

• Employers' Liability Insurance - due to the Employers' Liability (Compulsory Insurance) Act 1969 - this law made liability cover for employees compulsory for anyone employing staff.  It was ratified in Jersey by the Employers’ Liability (Compulsory Insurance) (Jersey) Law 1973 and further amended by the Employers' Liability (Compulsory Insurance) (Amendment No. 3) (Jersey) Law 2007.
• Motor Insurance - due to the Road Traffic Act 1988 – this was a consolidation of prior Acts into a single piece of legislation that made it compulsory for third party liability cover to be mandatory for all vehicles using the public highways.  Essential therefore for all businesses operating their own vehicles.

Professional Indemnity cover is also sometimes required by businesses as a mandatory insurance, but rather than being due to an Act of Parliament, this cover has usually been requested by the industry regulator as part of the business registration and authorisation process.

3) What Are The Consequences Of Not Being Insured?

Commercial Insurance may seem like an unnecessary cost, however, taking the risk of being uninsured could be detrimental to your organisation should things go wrong.

By taking out a Commercial Insurance policy, you are handing the responsibility over to the Insurer rather than carrying the risk yourself.

If Commercial Insurance is also required by law, you could be committing an offence by not having it.