Researching the Business Insurance, Legal Issues & Goodwill

(ii) Credit Insurance:

This protects you against customers who fail to pay their invoices. Because the risk of bad debt can be high, you would probably find it hard to get cover for this unless your business has been successfully up and running for some time.

(iii) Public Liability:

This provides you with legal cover and protection against claims for which you would be legally liable for and brought to you by anyone other than your employees for bodily injury or loss or damage to property arising in the course of your business.

(iv) Factory Insurance:

This usually covers you for machinery and equipment, as well as fire and theft etc. (policies will differ depending on requirements).

(v) Premises Insurance:

If you are going to buy the premises, or if it is a condition of the lease, this would cover you against fire or any other perils, such as, burst pipes storms etc. (check policy details).

(vi) Employers Liability:

This is only required if you have employees. This insurance is to protect employers against claims for bodily harm or death brought to employees in the course of employment ( this also includes injury by other employees, for whom the employer is liable). A certificate has to be displayed in a place that all can see.

(vii) Office Insurance:

This usually covers you for computers, fax, printers, fire, damage, theft and files and records. (policies will differ depending on requirements).

(viii) Home Office:

This usually covers the home office scenario: computers, fax, fire due to office equipment etc. Note: this will not be covered by home insurance.

(ix) Fidelity Insurance:

This covers you for fraud or dishonesty by employees; it can be taken out for any amount of employees or the whole staff.

(x) Shop Insurance:

This usually covers you for building and content in the event of fire and theft etc. (policies will differ depending on requirements).

(xi) Commercial Motor:

Third Party Cover – This insures your liability to others in the case of a car crash or other motor vehicle incident. This includes death or injury to anybody (but not death or injury to employees while they are working, as they are covered by employer’s liability insurance (see below). Fire and Theft (third party) – This is an optional addition to your third party cover. Comprehensive Insurance Cover – In addition to the above, this covers you in the event of accidental damage regardless of whose fault it was. If you use your own private vehicle in your work, then you should inform your insurers as you will not be covered for business use (travelling to/from work is usually OK).

5o) Legal Issues

It is important that you look into any legal issues that the business has either in the past or as a going concern. The owner may decide to keep some of this information quiet until the deal has been completed so it’s down to you to recognize any issues. The business may have a law case against it for something that has happened in the past and could restrict the success of the business (bad reputation, etc). Look into any government regulations that may conflict with production or any operations in the business. Does the business require a license for the type of industry it is in ? Such licenses are related to the assets and stock of the business and any activities that may be involved (for example, serving alcohol, selling tobacco, etc). The most likely categories being:

• Accommodation
• Liquor
• Entertainment
• Food

However, there are other types of licensing/registration required to operate a specific business, not mentioned above, and with some of these, as with those above, it is a matter of suitability, knowledge, experience, and qualification etc to be able to trade. This can be; obtaining the ABTA accreditation (the travel standard), a consumer credit license (for consumer finance), a taxi firm, and of course a sex shop.

5p) Goodwill

Goodwill is another term for reputation and can be classed as an intangible asset to the business. When a business is sold, it sells with it the goodwill and is valued accordingly. Reputation is something that you can investigate which may be included as part of your research for creditor and supplier relations. One thing that you have to be aware of is that the goodwill may follow the owner when they leave.

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