Business insurance: What you need to know and how to get it
You’ll find a wide range of insurance products designed to shield you from many of the day-to-day risks involved in running a small business.
It’s useful to look at insurance not as just another admin burden, but as a way of actually strengthening your startup. Take a close look at the different types of cover that might be relevant to your business needs, that could help you stay on track should the unexpected happen.
To help you with this, we take a look at the various types of insurance products your limited business might benefit from — and how to get hold of them.
How insurance can help a small business
Liability insurance is perhaps one of the first policies to consider when forming your business. Firstly, there are different types of liability insurance designed to cover the financial cost of meeting claims that could be brought against you. Secondly, the benefits of having it in place go beyond simply having someone there to pick up the tab. For a start, if you are unlucky enough to be faced with a claim, your insurer will handle it for you — saving you a great deal of time and hassle.
Let’s face it though, neither you nor your insurer wants to be faced with a claim, so it follows that insurers are usually proactive in helping to avoid claim scenarios. For example, in areas such as employee health and safety and consumer protection, they can give practical guidance with risk assessments. This is something that can be especially valuable for a small business owner who is still getting to grips with what’s expected of them.
Peace of mind is the other big advantage. This can work in two ways: you have a valuable ‘cushion’ against the losses that might stem from a risk arising, while also helping to show your customers and employees that you take your business — and their well-being — seriously.
Insuring your employees
For staff, two types of insurance should be on the radar of small business owners: one is compulsory, the other is one worth thinking about.
Employers’ liability insurance
This is important: you can be fined up to £2,500 for each day you don’t have employers’ liability insurance for your staff. So, if you’re thinking of taking on a team, it’s an absolute must. It covers you against claims by your employees in the event they suffer injury and loss as a result of fault on your part, or that of a fellow employee.
Key person insurance
By their nature, small businesses tend to be close-knit. From loss of expertise through to maintaining customer relationships, the loss of a team member can be a huge blow. Key person insurance can help to lessen the financial effects of this. With it, you are insuring the business against the possibility of specified individuals (including yourself) dying or becoming seriously incapacitated. It’s certainly a morbid prospect, but the protection it provides could be a critical safeguard for your business, should the worst happen. It’s just one to bear in mind.
Public liability insurance
This covers you against claims for injury and loss made by members of the public, as well as damage to property belonging to someone else as a result of fault on your part. A customer tripping in a shop is perhaps the most familiar public liability claim scenario. But it’s not just about customers. For example, If you have a steady stream of suppliers visiting your workplace, consultants popping in and out, or if your business has any direct contact with members of the public, this type of insurance should be considered. On that note, if you haven’t yet got that far, it’s worth checking out our article on how to find the best suppliers for what you need.
Product liability and professional indemnity insurance
Public liability insurance tends to specifically exclude ‘defective workmanship’. If a claim stems from a specific problem with the goods or services you supply, you need specialist insurance.
Product liability insurance
If you manufacture, supply, install, or maintain products, this provides cover for claims stemming from injury or damage caused by faulty products.
Professional indemnity insurance
If you provide advice or a service, and your client suffers financial loss as a result of mistakes made by you, a professional indemnity policy covers any resulting compensation claims.
Both product liability and professional indemnity claims can be difficult and costly to resolve — even if those claims are ultimately shown to be without merit. As such, this type of specialist insurance can save you a great deal of hassle.
How to find insurance cover
As with personal insurance, shopping around on the internet and via price comparison sites can often yield results. However, there’s also a lot to be said for going through a specialist business insurance broker. Such brokers can look at the needs of your business as a whole and put together a bundle of policies to meet your particular circumstances. It leaves you free to focus on other tasks.
Trade associations are worth looking at too, as they often have preferential rates and deals for members. Especially when it comes to professional indemnity and other forms of specialist insurance, it’s also important to check that the policies you are looking at comply with the standards set by your profession’s governing body.
Whether you’re an accountant, construction worker, tradesman or consultant, it’s always better to be protected against anything that could go wrong. Take a look at how we could help protect you with a personalised business insurance policy.