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As a business owner, you face two perils that your employees do not face. First, you run the risk of having your personal assets seized to pay off your business creditors, whether the threat comes in the form of vendors demanding payment or lawsuits arising from your business. And, conversely, you also run the risk of having your business destroyed by a personal creditor who seized upon your business to pay off your personal debt.
To fully protect both your business and personal assets, you need to implement a comprehensive asset protection plan that includes purchasing insurance, using limited liability protections from formal business entity formation, and actively managing your finances to avoid exposure. Think of them as the three legs of the stool that is your asset protection plan.
While insurance does provide a measure of security—and is essential for some occupations and activities—it cannot shield your assets from all threats. Insurance policies are limited in what risks they cover and how much they pay. Either of these limitations can spell disaster to the small business owner. More importantly, insurance can’t adequately protect you from economic downturns and inability to make payments to creditors.
Even though you can buy insurance that will pay off if you are abducted by aliens, most insurance doesn’t protect you against far more probable events. The classic “uninsurable risk” is “punitive damages,” which go beyond merely compensating the person who sues you and “punish” you for conduct that was more than simply negligent. Although punitive damages aren’t the norm, even well-intentioned business owners can be at risk.
Plus, most policies have numerous exclusions from coverage. In one case, a company was stunned to discover that its “business interruption insurance,” would not pay because the fire that rendered the office inaccessible occurred in the building next door. In addition, the amount that your policy will pay is limited.
So, clearly, in order to fully protect your business and personal assets, you need more than insurance. Read out next blog for further information on the steps you need to take to place your assets beyond the reach of your creditors
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Julian Roche
MA (Oxon), MPhil, PhD
Chief Economist
Julian joined Cavendish Maxwell as Chief Economist in January 2019. Coming from an old real estate family in Ireland, his career as an economist began with a first-class honours degree in philosophy, politics and economics at the age of 19, following which Julian was an analyst with the UK Government. He later helped develop and launch the UK’s residential forecasting service with the firms that merged to become Global Insight. Julian subsequently developed derivatives in the City of London and established real estate futures contracts for what is now the International Commodity Exchange. He also ran a property development and management firm, before eventually serving as an international consultant and trainer to governments, central banks and notable firms including AXA, Citibank, DBS, Deloitte and Thomson Reuters.
Julian fills his work-free time with academic pursuits; he holds several postgraduate degrees, including a PhD in International Risk Management Policy, and also the Licensed Conveyancer qualification. Julian has published many business and academic texts and articles, and is also a keen walker – especially fond of the Scottish Highlands.
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Sarah-Jane Carter
BA (Hons) DipM
Head of Marketing
Sarah-Jane joined Cavendish Maxwell in January 2020 as Head of Marketing and is responsible for the development of the marketing strategy and execution across the Middle East region. An energetic and results driven marketer, Sarah-Jane possesses a wealth of multi-channel marketing experience, within both B2B and B2C environments which she has gained over a 25 year career. Prior to joining Cavendish Maxwell, Sarah-Jane held senior marketing positions for major developers in Dubai including Emaar, Dubai Properties and Dubai Sports City. She also worked for IWG as the Regional Marketing Director responsible for the MEA and APAC regions. Before relocating to the UAE in 2005, Sarah-Jane held various management roles in public and private sector companies in the UK including ten years at Royal Mail and seven years at the Bank of America.
Sarah-Jane is a member of the Chartered Institute of Marketing and has a BA(Hons) Degree in Business and Marketing
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