The dictionary definition of insurance is given as the business of providing protection against financial aspects of risk, such as those to property, life, or health. Another way of describing it is a risk transfer mechanism, which allows for a reimbursement of costs in the event of an unforeseen incident. Small businesses such as shops have had a need for insurance since the dawn of time.

Take, for example, the great fire of London, which started in September 1666, destroying so many London dwellings and businesses of that time, many built of wood and roofed with thatch. More than 90% of the population of the city was left homeless, and with the loss of any assets or stock that they may have managed to amass over the course of their lives. How many of these would have been delighted to have insurance in place, to allow them some compensation, however small, for the catastrophe that had ruined their lives. Although few deaths were recorded, many people died from the lack of shelter and hunger in the months following the fire - how many of these could have been prevented if insurance had existed then as it exists today? Today there are so many different types of ways to insure homes and businesses that it's difficult to choose between them.

For the small business, such as a bakery, for example, such as the small bakers in Pudding lane where the Great Fire started, what types of insurance would be offered today? Obviously the first that we would think of in the context of this article is fire insurance for the property- now virtually standard for all house or property owners, and even obligatory in many countries. Following from that are the other disaster categories- flooding being one of the most important, given that water can be every bit as destructive as fire. But many people don t consider the many categories of insurance that are available, business interruption insurance, for instance, for the time following the incident during which the owner of the business cannot carry on with his trade.

After insurance for property and buildings, the next would be for the assets and equipments used to carry on the trade in question. For our small baker, it would be little good having his premises restored by the insurance if he then lacked the tools of the trade, the ovens, the large baking pans and mixing bowls, the great bins for storing flour, the shelves and till for the shop, the aprons and hats for his staff- the list is almost endless, the equipment gathered together over years, lost at a fell swoop. For the final category, there are the liabilities. Suppose other people have been injured or materially damaged as a result of the disaster? In the great fire of London the liabilities of the Pudding Lane baker would have been very far ranging- how would the insurance companies have coped with that!