How Might Insurance Help you Avoid Financial Disaster?

General insurance protects you and your assets from the financial consequences of a disaster.

It can’t prevent anything from happening, but if it does, and it’s covered by your policy, you won’t have to pay the whole cost of a loss.

That means you’ll be much less likely to have to raid your savings or investments, borrow money, seek family or friends for financial assistance, or sell your assets to pay for repairs, building, or existing debts if something goes wrong.

You won’t have to rely on government and community-based aid, which is usually limited to emergency scenarios such as floods or bushfires and may not reflect the full magnitude of your loss.

Reasons why people buy insurance

Most people buy insurance for four main reasons:

  • High value to protect something they have purchased that has a high value (such as a house, a car, perhaps jewellery or a painting) and which would be expensive to replace. Often, a loan has been taken out to purchase the items.
  • Catastrophe to protect their property and possessions against a disaster, such as a fire, flood, cyclone or other calamity.
  • A specific event to protect them when they are doing something not covered by their normal insurance policies, such as travelling overseas.
  • Liability To provide financial protection if sued–for example, if a visitor should sue you for negligence after injuring themselves on your property,

Protecting what’s important

When you take out an insurance policy, you need to do some thinking about what is important to you and how much you are willing to put aside to protect those things if you were faced with their loss.

The majority of individuals are ready to pay an insurance premium to safeguard their home and its contents, as well as their car, boat, or caravan.

Insurance is typically purchased by business owners to protect their assets and stock, as well as to provide financial assistance in the event of legal complications. Choosing insurance coverage entails determining what is most essential to you.

Some types of insurance are required. State and territory governments, for example, compel automobile owners to get mandatory motor vehicle accident personal injury insurance when they register their vehicles in order to cover anyone they may damage while driving.

Business owners are required to contribute to their state or territory’s workers’ compensation plan for their employees. Property owners are also taking action.

What can you protect?

You should consider general insurance when the cost of a particular financial risk is much greater than the cost of protecting yourself against that risk.

Risk must be able to be valued in monetary terms for it to be included in an insurance policy. It must also be an uncertain risk, something that we can’t be sure will happen.

You must also have a direct interest in any loss that you insure against. You can’t take out house and contents insurance on the home of your neighbor, for example.

Nearly anything that is valuable can be insured, but in practice, most insured items share the following characteristics:

  • the loss or damage has a reasonable dollar value
  • the risk being covered could happen across a large number of people (such as theft, fire, car accident)
  • the premium is cost-effective

For whom is Financial Loss Cover intended?

Financial Loss Cover is ideal for companies that may cause losses mainly of a purely financial nature. Such companies include, for example:

  • attorney and law firms
  • accounting and bookkeeping firms
  • real estate brokers, and
  • property management firms.

Financial Loss Cover gives the insured financial protection against claims resulting from financial losses caused to clients. For instance, an accounting firm may cause significant financial losses to a client as a result of an accounting error.

The insurance covers, up to the sum insured entered in the policy document, financial losses caused to a third party and not related to bodily injury or material damage.

Why is financial loss cover useful?

In general, the purpose of liability insurance is to cover the company’s liability for damages caused to third parties. A basic form of liability insurance for any company is business liability insurance, but this does not cover financial losses.

If the damage caused by a company’s operations is mainly in the form of financial losses, the cover afforded by business liability insurance against the losses typical to the company is very limited.

Financial loss cover, in turn, covers purely financial losses and liabilities that arise from a contract. Together, business liability insurance and financial loss cover provide sufficient insurance cover.

In the event of a loss, you will be assisted by Pohjola Insurance experts, who will investigate whether a liability exists and what the amount of damage is.

This frees up your company’s resources for your core business and allows you to focus on the essential while we negotiate with the party demanding damages. If the claim is disputed and taken to court, your liability insurance will also cover the legal expenses of the proceedings. 

How can I take out Financial Loss Cover for my company?

Please leave your contact information using the button below and we will send you a quote for Financial Loss Cover. Requesting the quote will not obligate you in any way.

Our experts at Pohjola Insurance have extensive understanding of the sector and can provide more information on the content and price of financial loss cover. We also offer customised liability insurance for your company’s specific needs. Contact us for more information.

After receiving your quote request, we will contact you to determine the best liability and other insurance solutions for your company!

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