When considering business insurance, it’s important to think about the covers you might need. Employers’ liability cover is a legal requirement for most businesses with staff, public liability insurance is important if you’re in contact with members of the public, and professional indemnity insurance is useful if your business offers advice.
Think about the kind of work you do and the risks you need to cover: could your business face a compensation claim from a disgruntled client because they believe you’ve been negligent? Is there a chance a member of the public could be injured by your business and claim compensation? Do you have buildings, contents, business equipment, or stock to insure?
Here are the most popular types of business insurance and the reasons why business owners may need them.
Public liability insurance is a key consideration if your business comes into contact with members of the public, whether that’s at your premises or elsewhere. It can protect you against compensation claims for injury or damage made by clients, customers, suppliers, or other third parties. Most shops, restaurants, hairdressers, builders, and tradesmen take out this insurance. Check your client contracts to see if a particular level of public liability insurance is required.
Professional indemnity insurance is important if your business gives advice or offers a professional service to other businesses, or if you deal with client data or intellectual property. If you make a mistake in your work and your client loses money and sues you, your professional indemnity insurance can cover the compensation claims and legal costs. Some professional bodies and regulators require their members to have this insurance, including bodies for surveyors, accountants, and architects.
If your business employs staff, you’re probably legally required to have an employers’ liability insurance policy. This covers compensation claims made by a member of staff because they’ve suffered injury, illness or damage as a result of their work. Certain companies are exempt from the legislation, including some businesses that only employ close family members. To see if you’re exempt, check the Health and Safety Executive (HSE) guidelines or seek advice.
Whether you work from home or have separate business premises such as a shop, office, or pub, business buildings insurance should be a priority. If you rent the premises, make sure to check with your landlord to see what’s already covered.
You can also protect the contents of your business premises, your business equipment and tools. If these are damaged, destroyed, lost or stolen, this cover will pay the cost of replacements or repairs.
If you hold any stock, whether on your premises or in storage, stock insurance will cover the cost of replacing it if it’s damaged, destroyed or stolen.
Product liability insurance protects you should a customer of yours suffer damage as a result of a faulty product you provide. You may be held liable for damage even if you didn’t manufacture the product.
Personal accident insurance covers serious injury or death caused by an accident. It can pay out for lost income, medical costs and hospitalisation, up to the limit of the policy. The maximum amount is £10,000 for an injury and £20,000 for death.
If your business is disrupted by material damage caused by an event such as a flood or fire, business interruption insurance provides you with the financial cover you need to get back on your feet. For example, if a fire destroyed the contents of your business premises, business interruption insurance would cover your the consequential loss of revenue, as long as your contents are also insured.
Business legal protection insurance - also known as business legal expenses insurance - covers your commercial legal expenses and provides protection against the potential costs of legal action brought by or against your business.
When setting up your business insurance you should think about what you need to be covered right now, as well as what you might need going forward.
If you don’t have any employees yet then you won’t need to worry about employers' liability insurance for now, but if you know you’ll be hiring some in the very near future then you might want to consider adding it onto your policy now.
If you’re not sure about how your business might evolve, don’t worry, you can always add more cover at a later date.
Small businesses can require many of the same types of insurance as larger businesses but it all depends on the setup of your business.
For example, if you’re a one-man band then you won’t need employers' liability insurance, but you may still want other aspects of your business to be covered.
Once you've had a think about what you need your insurance to do for you, then you can choose from the covers above and many others to create a policy that suits your needs.
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