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Chapter 4

Protecting business interests

If you own your own business, there are a few different areas that you
can protect with business insurance, and the first one is generally your
business and the business’ ability to generate income.

It used to be called Keyman Insurance, and essentially, if you’ve got one,
two or three parties that are primary drivers of revenue for your business,
you can insure them so that if they are physically unable to work for a
period of time, the business income doesn’t suffer. It is the equivalent of
income protection, but for the business.

The second one, a very good, simple mechanism for business protection,
is buy/sell agreements. If you’ve got multiple partners or business
partners, they can cross-own business insurance policies so that if any
of the business partners die or are totally and permanently disabled, the
business can pay for premiums. In that event, the spouse of the respective
person receives the benefit in the event of a claim, and the business value
passes to the surviving business members. It is an unobtrusive and simple
way of protecting the business without having to ask the spouse, assuming
that the spouse is still alive, “How do we pay you out of your business
interest?”
In one scenario, the spouse might come into the business and say that they
will take over the deceased partner’s role. For a variety of reasons that is
generally not a great plan. The business owners that are actively running
the business don’t necessarily want someone lacking skills or experience
to just come in and start trying to run it. So the partnership agreement
and the cross-own business insurance can assist with reducing the impact
of that, or removing that possibility.

Investment property insurance

There are a few insurances that go hand in hand with an investment
property. Most importantly, you will need building insurance, and then
landlords’ insurance, which most people have.

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