Business Protection deals with the "what if " factor for businesses, especially the smaller tight knit organisation where every senior player is important. The main types of insurance are as follows:-

Keyman - Used to protect the business from the loss of a key person. Provides cash to the business to enable it to survive.

Partnership Assurance and Share Purchase - Protects the interests of the co-owners and those of the family of the deceased in the event of one of the owners dying.

You insure your car and factory and office, but what about your key people? Loss of a key person can result in loss of part of your knowledge base, the damaging of your credit status, or connections with customers and suppliers.

It has been said that if 4 people aged 40 start a business together the odds against all of them getting to retirement age are less than even. It is more likely than not that one will die.

What happens if :-

• Your top salesman dies ?
• Your manager has a heart attack ?
• You yourself die?
• Your partner or fellow directors die?

Naturally every case is different. It may simply be an expensive annoying hole in the cash flow if the loss was of a technical person. ( I.e. costs of recruitment, plus a locum or consultant for say, 6 months ). However, if it was to be a key player, and the bank was providing overdraft and credit because of his/her skills, they might call in the credit line, sinking the company.

The most difficult problems arise with the death of a principal. In a partnership the spouse normally has rights, but is the cash there to do the right thing? In a limited company a spouse can be cold shouldered and find her shares worthless. ( Minority holding, no right to a job, other shareholders cut dividends and increase salary, and shares of no use to outside buyer. In a majority holding the other guys simply walk, taking the staff and clients with them). I've seen it happen.

The answer is either Keyman, Partnership Assurance or Director Share Purchase.