Business Insurance in North Cyprus

A business is worth far more than its building alone

A business's ability to keep trading depends as much on its fit-out, its fixtures and fittings, its stock, its electronic equipment, its machinery and its other commercial assets as it does on the building it occupies.

A fire, water damage, theft or machinery breakdown may cause far more than physical damage alone.

The same event can lead to the following:

• Loss of stock
• Damage to machinery or electronic equipment
• Temporary closure of the business
• Sales or production coming to a halt
• Fixed costs continuing to run
• Loss of rent
• Liability arising towards neighbouring businesses or third parties

For this reason, the key question in Comprehensive Business Insurance is not merely “what was damaged?”.

The question “how does this damage affect the business's ability to operate?” must be considered at the same time.

Which commercial assets can be insured?

Depending on how the business operates, different groups of assets can be included in the policy.

Buildings

Where the building the business occupies belongs to the insured, the structure itself can also be insured separately.

Fit-out and fixed installations

The following elements, put in place to enable the business to operate, can be assessed with their own separate insured values:

• Fixed fit-out
• Partitions
• Counters
• Shelving systems
• Fixed installations
• Permanent business arrangements

Fixtures and fittings

Desks, chairs, furniture, cabinets, shelving and other business equipment can be treated as fixtures and fittings.

Stock and goods

Goods held on the premises for sale or production are treated as stock and goods.

The value of stock is one of the most important elements of the policy, particularly for retail shops, warehouses, restaurants and manufacturing businesses.

Electronic equipment

Computers, servers, POS systems, security systems, office devices and electronic control systems can be essential parts of a business's day-to-day operation.

Depending on the structure of the policy, these assets can be assessed separately under Electronic Equipment cover.

Machinery and equipment

In workshops, restaurants, technical service providers, production facilities and other businesses that rely on mechanical systems, machinery is a fundamental element of operational continuity.

Machinery included in the policy can be assessed separately under Machinery Breakdown cover.

Principal physical risks

Depending on the scope of the policy and the cover selected, risks such as the following can form the subject of the policy structure:

• Fire
• Lightning
• Explosion
• Earthquake
• Flood and inundation
• Internal water and burst pipes
• Storm
• Landslip
• Smoke
• Impact by land vehicles
• Impact by aircraft
• Impact by marine vehicles
• Strike, riot and civil commotion
• Terrorism
• Theft
• Glass breakage
• Damage to electronic equipment
• Machinery breakdown
• Debris removal

The scope of cover, limits, exclusions and special conditions are set out in accordance with the policy issued.

Fire, lightning and explosion

For commercial businesses, fire is not a risk that affects the building alone.

The same event can affect the following assets at the same time:

• Fit-out
• Stock
• Fixtures and fittings
• Electronic equipment
• Machinery

Physical damage occurring while the fire is being extinguished can also be considered as part of the event as a whole.

Physical damage caused by lightning and explosion is dealt with under the relevant policy cover.

Flood, inundation and internal water

Water damage can affect different groups of assets at the same time, particularly in ground-floor shops, warehouses, restaurants and workshops.

Water can damage the following assets:

• Stock
• Electronic equipment
• Fit-out
• Machinery and technical systems

Internal water damage, on the other hand, can arise from pipework, kitchen systems, water tanks or other fixed water systems within the building.

The risk here is not only the cost of the physical damage.

The business being unable to operate as a result of the damage can also have commercial consequences.

Theft

In the event of theft from business premises, the loss is not limited to cash alone.

The following assets of the business can each carry their own value from a theft standpoint:

• Stock
• Electronic equipment
• Fixtures and fittings
• Machinery
• Other insured commercial assets

The nature of the business's activity, the building it occupies, its security arrangements and the nature of the goods insured are all taken into account when the policy is prepared.

Electronic equipment risk

In modern businesses, the failure of electronic systems does not affect the device itself alone.

A POS system, computer infrastructure, server or control system ceasing to work can directly disrupt day-to-day operations.

For this reason, electronic equipment is assessed not only in terms of fire or theft, but also in terms of its own technical risks.

Machinery breakdown

In businesses that rely on machinery, a single item of equipment going out of service can bring production or service to a complete standstill.

The following items specified in the policy can be assessed separately under Machinery Breakdown cover:

• Production machinery
• Technical equipment
• Service machinery
• Mechanical business systems

Glass breakage

In shops, restaurants, cafés and other commercial businesses with large shop-window surfaces, fixed glazing is an important physical asset.

Damage occurring to shop windows and other fixed glass surfaces included in the policy can be assessed under Glass Breakage cover.

What happens if operations stop?

The true commercial impact of physical damage is not always limited to the value of the damaged property.

The business being wholly or partly out of operation can lead to the following:

• Sales coming to a halt
• Production being interrupted
• An inability to provide services
• Loss of customers
• Rent and other fixed costs continuing to run

Business interruption

Where the business's operations are interrupted as a result of insured physical damage, the resulting financial impact can be assessed separately if Business Interruption cover has been selected.

This cover can be important not only for large industrial businesses, but also for shops, restaurants, warehouses, offices and service businesses.

Loss of rent

Where insured physical damage renders commercial premises unusable, this can result in a loss of rental income.

If Loss of Rent cover has been selected, this financial consequence can be assessed separately.

Fire legal liability

A fire that starts on business premises may not damage the insured premises alone.

A fire can damage the following:

• A neighbouring shop
• Adjoining business premises
• A rented building
• Property belonging to third parties

Fire Legal Liability cover allows liabilities that may arise from such third-party damage to be assessed separately.

Every business has a different risk profile

Comprehensive Business Insurance should not be treated as a standard package.

For a restaurant, the following elements may come to the fore:

• The kitchen
• Cooking equipment
• Electrical load
• Refrigeration systems

In a retail shop, the following elements may be more decisive:

• Stock
• The shop window
• POS systems
• Electronic equipment

In a workshop, the following elements may make up the business's principal areas of risk:

• Machinery
• Technical equipment
• Electrical systems

In an office, on the other hand, electronic equipment, servers and office equipment may be more critical to operations.

For this reason, the structure of the policy should be determined according to how the business actually operates.

Why is the right insured value important?

A business's total value is not made up of a single figure.

Buildings, fit-out, fixtures and fittings, stock, electronic equipment and machinery are different groups of assets and should each be assessed separately.

Setting the insured values in line with their true worth is one of the fundamental elements of structuring the policy correctly.

As the following aspects of the business change over time, these values need to be reviewed again as well:

• Quantity of stock
• The machinery inventory
• Electronic equipment
• Fit-out
• Operating capacity

What information is considered when the policy is prepared?

The following information is principally considered together:

• The nature of the business's activity
• Its full address
• How the building is used
• The value of the building
• The value of the fit-out
• The value of the fixtures and fittings
• The value of the stock
• Electronic equipment
• Machinery and equipment
• The cover requested

Depending on the size and type of the business, a further risk assessment may also be required.

The link between physical assets and operational continuity

Comprehensive Business Insurance is not founded merely on listing the property a business owns.

The real assessment is based on which assets are critical to the business, which risks could affect those assets, and to what extent any resulting damage could halt the business's operations.

For this reason, the right business insurance should be a structure that takes into account not only the physical assets a business owns today, but also its capacity to keep operating after a loss.