Businesses exist to create and earn money. Not every business will make money, particularly during the start-up phase. However, money, whether cash, cheques or electronic transfers, such as credit card payments and BACS payments, will be involved.
The money a business handles, is an asset, and can be covered under a business insurance policy. As with other types of cover, for business assets, there are different types of money insurance, that can be arranged.
We’re going to explain that covers available for the day to day cash that a business is involved with. This is different from cyber theft and fraud which is usually available under a separate insurance policy.
What types of policies will include money cover?
Many commercial insurers in the UK have created policies, for different business categories. These include shops, restaurants, takeaways, hotels, guest houses, pubs, offices and salons. Each of these business types will have slightly differing amounts of cash in their business premises on a day to day basis. In 2017, even though electronic payments are increasing in amount and frequency, most retail establishments will still receive payment in cash. Insurers do not tend to offer different limits, by business category, instead they’ll provide standard cover for amounts in excess of those required by most businesses.
What cover is typically available?
We’ve looked at various policies, from a number of insurers, and the limits and covers noted below are an example of what is available. You’ll need to refer to your policy wording, or speak to your business insurance broker, to clarify what cover you have. If you feel that the limits are not sufficient, most policies will allow you to increase the amounts, for an additional premium.
We firstly need to explain the different types of money:-
Cash and negotiable money is anything that is, essentially, untraceable and is easily spent or used. This includes, notes and coins, postage stamps and gift tokens.
Non-negotiable money includes crossed cheques and (paper) credit card sales vouchers, which cannot easily be used. Fraudulent activity is usually required to convert to cash.
Cash limits are lower than non-negotiable money. Non-negotiable money can be recouped. For example, a business may have twenty cheques ready to pay in. If these are stolen, they cannot be spent or used, but the business will want the money as soon as possible. If there is fraud involved and they are spent, the insurance will usually pay out for these amounts and will then try to recoup from either the customer, that wrote the cheque, or the bank. It is therefore important to keep detailed records and to back these up, away from the business premises. In reality, claims for non-negotiable money are very rare.
Type of cover and typical limit
Cash on the business premises, during business hours £3,000
Cash in transit, to or from the bank £3,000
Cash in a locked, approved, safe outside of business hours £2,000
Cash on business premises, outside of business hours, not in a safe £500
Non-negotiable money £250,000
We’ve mentioned that these limits can be increased, for many policies. You do need to obtain professional advice from an independent business insurance, before increasing any limits. For example, under a pub insurance policy, there may be a cash limit of £3,000, in a locked safe. A particular business may want to increase this to £5,000 over weekends, as they may not always be able to get to a bank, or bank night safe. A broker should advise the business to consider higher limits, for example, over Bank Holiday weekends, when they may hold higher levels of cash. The insurers may also specify a certain type of safe to be used, for the increased limits.