What is commercial loan insurance? Learn everything you should know about business loan protection in our extensive guide to business liability insurance UK.
- Spectrum FA Guide to Business Liability Insurance UK
- What is Business Liability or Commercial Loan Insurance?
- What is Critical Illness Insurance?
- What Illnesses or Conditions Does Critical Illness Insurance Cover?
- Why is Business Loan Protection Important?
- Business Liability Insurance UK
- How Much Does Commercial Loan Insurance Cost?
- Who Pays for Business Liability Insurance?
- How Can Spectrum FA Help You with Business Loan Protection?
Spectrum FA Guide to Business Liability Insurance UK
Frequently also referred to as business or commercial loan insurance, business liability protection is an important area of protecting your business against unforeseen circumstances. But what exactly is it and why is it important to have it? To help business owners understand the ins, outs and importance of business loan protection, Spectrum FA have taken our vast experience and knowledge in the field of business protection insurance to create this guide to business liability insurance UK.
Not sure whether you need commercial loan protection? Request a free review of your company’s circumstances today.
What is Business Liability or Commercial Loan Insurance?
Most companies have some type of business debts. Such debts may, for example, consist of overdraft facilities, commercial mortgages or varying types of asset finance; development or other business loans.
Sometimes these finances/loans are sourced via banks and/or other financial institutions and sometimes they are obtained via private sources like, for instance, company shareholders/directors or other private contributors and investors.
Wherever funds borrowed were sourced and whatever they were ultimately used for, what all these loans have in common is that as a rule, they are usually secured against one or multiple specific individuals within the company borrowing funds.
These individuals, who are known as guarantors, essentially agree to provide lenders with guarantees that loans/finances will be repaid under all circumstances.
Consisting of life insurance policies with or without critical illness cover, business liability policies protect companies against the loss of a guarantor due to death or critical illness (if this cover is added).
What is Critical Illness Insurance?
Critical illness cover is available both as a life insurance add-on and as a stand-alone insurance policy. This type of policy/policy add-on protects your company in the event of a guarantor being diagnosed with a critical/serious illness as specified within the policy’s terms & conditions.
The illnesses or conditions that are covered may vary a great deal between insurers, although most of them include a set of standard conditions determined by the Association of British Insurers, or ABI. Some of the standard conditions are:
- Kidney failure, multiple sclerosis & stroke
- Coronary artery bypasses & major organ transplants
- Major heart attacks & multiple specific cancers (which will be defined within the policy)
Many policies will, however, also offer the option to cover extensive ranges of additional conditions and illnesses. Some insurers and policies may offer these ranges either as part of their ‘standard range’ or as optional extras.
Get in touch with Spectrum FA to request a no-obligation review or learn more about critical illness or other types of business protection insurance now.
What Illnesses or Conditions Does Critical Illness Insurance Cover?
Conditions covered in addition to the ABI’s standard set mentioned above may include:
- Aplastic anaemia, respiratory and/or liver failure (advanced stage) and/or benign brain tumours
- Aorta graft surgery, traumatic brain injuries and/or motor neurone disease
- Bacterial meningitis, loss of a limb (hand/foot) and/or permanent progressive supranuclear palsy
- Replacements/repairs of heart valves, eyeball removal and/or CJD (Creutzfeldt-Jakob Disease)
- Dementia/Alzheimer’s disease, permanent blindness, deafness and/or loss of speech
- Cardiomyopathy, Parkinson’s disease and/or multiple (permanent) system atrophy
- Coma and any associated (permanent) symptoms and/or primary pulmonary hypertension
- Encephalitis, open heart surgery/median sternotomy and/or spinal strokes
- Total permanent paralysis/disability and/or strokes accompanied by long-term (minimum 24 hrs) symptoms
- HIV infections contracted through physical assaults, blood transfusions or work accidents
- Third degree burns if these burns cover 20 per cent of the affected person’s face, head or other body surface areas
- Systemic lupus erythematosus with considerable complications
Some critical illness polices also offer the option to include other diverse illness and conditions. Spectrum FA advisors can offer more detailed information on this.
Why is Business Loan Protection Important?
Lenders/investors obviously must protect their own interests and make sure the loans they provide can and will be repaid – which is, of course, why they insist on loans being secured against varying individuals within a borrowing company in the first place.
Should a guarantor become too ill to work or die, they therefore either:
- Pass the debt on to the deceased guarantor’s estate (next of kin, other beneficiaries), i.e. the heirs/beneficiaries may take on the role of guarantors; or
- Demand immediate repayment of outstanding debts in full
If a deceased guarantor’s family/beneficiaries are not prepared (or financially able) to take on this role and/or your company does not have the resources (or access to alternative financing options) to immediately repay outstanding commercial liabilities, such a death could have serious, potentially disastrous consequences for your business’ financial security and future.
Protecting your company against such a loss is therefore imperative. Spectrum FA have the experience and know-how to help you do so effectively. Contact us now to find out how.
Business Liability Insurance UK
So, how does business loan protection work? If your company has business loans secured against one or more people (guarantors) within its employment, you take out a business liability policy, which is essentially a life insurance policy (to which you may, if so desired, add critical illness cover – highly recommended) with:
- The guarantor/s as the individual/s to be insured, and
- You (your business) as the policyholder and beneficiary
Should one of your insured guarantors unexpectedly pass away or be diagnosed with a critical illness specified in your policy’s terms & conditions (if you have decided to select this optional add-on cover), the policy will pay out a lump sum to you or, to be more precise, your company. This can then be used to fully repay any loans/financing secured against this person.
When taking out such a policy, it is obviously of critical importance to ensure adequate cover to make such repayments in full is provided while simultaneously making sure premiums are kept at an affordable level (i.e. ensuring premiums will not put unnecessary financial pressure onto your business).
Unsure about whether you should have business liability protection or how much cover you need? Request a free review now to find out.
How Much Does Commercial Loan Insurance Cost?
The cost of business liability protection policies depends on:
The amount of cover you need, which in turn depends on the size of your outstanding business debts (i.e. the higher your outstanding balances are, the more cover you require and the higher your premiums will consequently be);
- Whether critical illness cover and/or other add-ons/optional extras are selected, and
- The conditions that will be covered if critical illness cover is included.
As with any other life insurance policy, premiums will also depend on the guarantor’s age and his/her medical history, smoker status, occupation and/or leisure pursuits.
If the guarantor to be insured is, for instance a comparatively young marketing executive who loves to paint landscapes in his spare time, premiums would most likely be significantly lower than they would be for an older director who enjoys engaging in high-risk business and/or leisure activities (parachuting, rock-climbing, motorsports, etc.).
As premiums also vary between policies and providers, finding comprehensive cover at premiums your company can afford without experiencing undue financial pressure can be difficult. Spectrum FA can assist you with that. To learn how, get in touch now.
Who Pays for Business Liability Insurance?
While business liability protection is taken out in relation to your company’s guarantors, you would take out a policy to protect your business’ financial security and ability to carry on trading. As such, you/your company are responsible for the payment of premiums.
Worried about the cost of premiums? We can help you find perfect cover at competitive premiums – contact us to learn more.
How Can Spectrum FA Help You with Business Loan Protection?
Spectrum FA advisors have provided numerous companies across countless industries with expert business protection insurance advice and guidance for many years.
As such, we are highly experienced, knowledgeable specialists in commercial liability insurance and can advise & guide you throughout the entire process of arranging a suitable policy.
Offering a completely customised, bespoke service, we also have excellent connections to industry-leading British insurance companies and their most competitively priced and reliable policies.
We will review your company’s unique circumstances and will offer appropriate tailored advice. We can then recommend (as well as arrange) suitable policies to meet your specific requirements at the most competitive, affordable premiums.
Do you have business liabilities that are secured against one or more guarantors within your company? It is imperative for you to protect your business’ financial future from the effects the death or significant illness of one of these guarantors could have on your company – so get in touch to arrange an appointment for your free, no-obligation review today.