This is a method of partially overcoming the disadvantages discussed in the previous section “Part Wages Insured – Key Staff”. This option is to insure non-essential staff for short periods to cover short-term losses, and/or then cover the cost of redundancy should the disruption be for an extended period.
To insure this correctly, you need to identify and clearly advise the Insurer in advance of the Specific Categories of worker that are to be insured or not insured, and then calculate the Sum Insured for each category.
Insuring only essential staff alone, or combining it with a shorter cover for non-essential staff, does require additional care by management. Just who is and who is not essential staff needs to be constantly challenged to ensure that those essential to the business are insured. Points to consider are:
Availability of labour, both skilled and unskilled.
Degree of skill, and costs of retraining.
Time requirement for recruitment and training, plus management distraction.
Drain on cash flow.
Union requirements for wages in lieu.
Particularly for small- to medium-sized businesses, by the time you do all this and calculate the total Sum Insured required, the difference between the premium for this reduced cover and that for total cover is so insignificant that it is not worth the effort or the risk not to insure fully.
To take this course of action we recommend you speak with your insurance broker or adviser who can explain and quote on all the various options available.