You have public liability, employer’s liability and professional indemnity. But the person the business depends on most has no cover at all. Here is how to fix that.

The gap nobody talks about

Business owners are brilliant at insuring the things their accountant or solicitor tells them to insure. They are terrible at insuring themselves, because nobody requires them to.

There is no lender demanding income protection the way a bank demands mortgage protection. There is no law requiring you to cover your own income the way employer’s liability law requires you to cover your staff. The result is that the one financial risk most likely to bring down the business, the owner being unable to work, is the one with no cover at all.

What the gap looks like

A business owner earning €100,000 on Class S PRSI does not qualify for Illness Benefit. The State pays nothing.

If they are out for six months, the gap is roughly €50,000 in lost personal income alone. On top of that, the business still has rent, wages, supplier payments and overheads to cover. The combined cost can easily run into six figures for a small company.

The three policies that close the gap

1. Income protection for the owner

Replaces up to 75 per cent of your income if illness or injury stops you working. Pays monthly, like a salary, for as long as you are unable to work. Premiums qualify for tax relief at your marginal rate.

For the self-employed, this is the foundation. Everything else is secondary. If you can only afford one policy, this is the one.

2. Key person cover

Paid for by the business. If the key person, usually the owner, cannot work, the business receives a lump sum to cover overheads, hire temporary help or manage the disruption.

This is not just for large companies. A restaurant with one head chef, a salon with one senior stylist, a consultancy built around one person’s expertise: If the business cannot function without someone, that someone needs key person cover.

3. Partnership and shareholder protection

If you and a business partner own a company 50/50, what happens if one of you dies? Without a plan, the surviving partner could end up in business with the deceased partner’s spouse, their estate or a court-appointed administrator.

Partnership protection puts a life insurance policy in place that funds the buyout of a deceased or critically ill partner’s share. There is a cross-option agreement that says exactly what happens: The surviving partner uses the insurance proceeds to buy the other partner’s share. The deceased partner’s family receives a fair price. The business continues.

Who this applies to

This matters more in sectors where the owner is physically on site every day.

A restaurant owner who is there from open to close. A builder running a crew. A salon owner who manages the schedule and the clients. An interior designer or stager who is the creative lead on every project.

These are businesses where the owner cannot work remotely from a hospital bed or hand the critical decisions to a deputy, because there is no deputy. In hospitality especially, margins are tight, cash flow is seasonal and the business depends on the owner being present.

If that is your world, income protection is not a nice-to-have. It is the only thing standing between a health problem and a business problem.

What it costs

Income protection for a 40-year-old non-smoker covering €75,000 of income with a 13-week waiting period might cost in the region of €120 to €180 a month before tax relief. After relief at 40 per cent, the effective cost is roughly €72 to €108 a month.

Compare that with the cost of being uninsured for six months: €50,000 or more in lost income, plus business overheads, plus whatever it costs to pick up the pieces afterwards.

One step

List every insurance policy your business holds. Then list every insurance policy you hold personally. If the second list is shorter than the first, that is the conversation to have.