Do you need Business insurance?
Insurance helps cover you and your business against unforeseen events which cause either financial loss or physical damage.
Therefore, the answer to the question is a definite Yes – you should have it and you must have insurance if you’re an employer!
The financial impact of being uninsured could put you out of business and could put at risk your personal money and assets (home). Also, in some cases the law requires you to have insurance.
If you are unsure about insurance, you are not alone! It is worth speaking to someone about your needs. Don’t be concerned about calling a specialist firm of brokers as they are there to offer advice and are used to handling customers who are ‘shopping around’.
Before getting a quote, it is worth thinking about ‘How will insurance work for my business?’
There are several different insurance policies to help protect you, or soften the blow, from an insured event.
Today, many insurers have designed policies with you in mind and basic policies can be relatively cheap and effective. However, you must be careful not to over- (or under-) insure your risks so read the ‘small print’ to make sure that you are adequately covered.
As a starting point we suggest that you make your own assessment your risk – the best method is to answer questions about your business:
This ….. event will have a negative impact on my business (the risk), it is quite/very common (likelihood of happening) and would affect my work (impact). I can best reduce the impact by having insurance (using a financial measure) or wearing gloves etc (taking physical measures) or a combination of both.
Bear in mind some events though likely have no real impact and are not worth insuring on their own, while others would put you in financial trouble.
Some examples might be:
- Tools broken – financial impact to replace
- Van stolen – financial impact
- Toe broken – physical protection (work-boots) but financial impact if you can’t work.
- Ankle sprain at home – financial impact as you can’t work.
- Accidental damage to a customers home – financial cost and damage to your reputation if not resolved quickly
As with all things, it’s worth a short pause before getting a quote to plan what is required. A simple plan to get an overview of what your insurance needs might be:
- List your business activities
- Get a sense of the likely size of jobs you are going to accept (what value)
- What equipment you will need and how much that will cost to replace
- How many employees you will need, if any, in the next 12 months
- What sort of transport do you need?
- Do have business premises? and how much should they be insured for,
Then you can decide what and how much insurance you must have and how much you would want ideally.
While we don’t offer advice, we do want you to be comfortable with the concepts of business insurance and what covers and wordings you could expect to find in a quote. What follows are the key covers you should consider.
What are the key types of insurance we offer?
This insurance will protect you from claims by customers and the public for losses arising out of your mistakes (negligence) at work. Public Liability policies are geared to the fact that the work done by “trades” is usually tangible (a new roof or new boiler installed). Remember disputes can often include legal expenses and even the courts, policies will often have cover for those costs either in addition to the limit of included in the overall limit – but check the small print. You will need to consider therefore the following:
- Is the cover right for my business?
- Is the limit of cover enough for the likely risks I am running? (do you have a current business plan?)
- Are there any special requirements imposed by the insurer?
- Do any of the exclusions impact the usefulness of my policy
- How much excess am I prepared to carry for each claim against me?
Public liability cover is different to Professional Liability insurance which we discuss below.
Every employer must have a valid Employers Liability policy even if you only have one employee. The cover is rather like Public Liability cover and protects you from the financial impact if an employee makes a claim for an injury or falls ill whilst at work for you.
Like Public Liability claims, these losses can be expensive and include legal costs. Bear in mind if you don’t have a policy you will be subject to heavy fines. Currently these fines run at £2,500 per day you don’t have a policy in force!
Homeworking & Buildings and Contents Insurance
You will probably already have a domestic buildings and contents insurance for your home. It is usually necessary to have a separate policy for your business. Some home insurance policies may have some cover some ‘home office’ use but be sure to check because your business stock and equipment will probably not be covered.
When choosing your policy, you need to think carefully about the following issues:
- Does the policy cover the premises and equipment I need and use?
- Will it cover any stock I have?
- Are special conditions applied for specific risks – for example flammable or valuable items?
- Is the limit and deductible right for me for this year?
- Does the cover extend to my support office equipment?
Special Note: Home insurance – for business
When starting, you may want to use your home as a base or an office. So carefully check your home insurance, it may be possible to extend your cover to allow certain commercial and business activities – don’t assume it will be ok! If in doubt call your insurer and ask!
Legal Expenses Cover
Legal Expenses cover is there for you if there is a dispute that arises in the course of your business. This can be with an employee, a third party, or the authorities (e.g. Health and Safety Executive), then subject to the limit of the policy cover the insurer will pay legal costs & expenses including the cost of appeals. This is covers cases where you are sued or need to sue. The insurers will need to satisfy themselves that you have a good chance of winning the dispute and they will have a significant say in how the case is run and whether to compromise and settle. Do read the policy wording before you buy this cover.
Professional Indemnity Insurance
This protects you or your company against legal claims for negligence and the losses you will have caused due to a breach in a code of professional conduct or being negligent. Historically the professions were people like accountants and lawyers today the scope of ‘professions’ is much broader.
Nowadays, many roles including digital designers, security consultants and other business services are covered under Professional Indemnity Policies.
If you are thinking of entering these professions, you will be required as part of your qualification to practice to have a minimum level of Professional Liability insurance. Usually, these businesses also require Public Liability cover as well.
Our Professional Indemnity cover includes some Cyber cover as well – this is covered briefly below or read more detail about this comprehensive cover..
It is not just doctors or dentists who need Medical Malpractice cover. If you are doing work outside the NHS or as a freelancer then you need to check what cover you have. Public Liability policies will usually have exclusions for most medical related activities. Any handling or administering of drugs for example.
Most clients or agencies will require you to have and be able to produce an insurance certificate before you can work for them.
Cover we do not currently offer but which you may need to consider.
If your business has a website and you are doing business online (that includes taking customer details, making sales or just accepting their payments etc) then your business could be hit by criminals or just malicious hackers.
Cyber cover is available to protect you from the most common types of attacks. They are not very expensive but again, review what you need, the impact of losing your site and balance it against the cost.
Some Professional Indemnity policies, like ours, include some Cyber or GDPR cover.
Private Medical Insurance
If you are injured and cannot work, then your business and income is likely to suffer. Perhaps you can’t afford to wait for NHS appointments and treatment. You may therefore need to look at buying protection. It is however important you understand the cover you are buying.
This is different to Private Medical Insurance. This is a form of income support and will pay out an agreed sum on a periodic basis after a ‘waiting period’ for up to a fixed number of weeks or months. Some policies will pay out a single lump sum while others will pay out a monthly income or cover specific payments like your mortgage and loans.
‘Commercial’ Vehicle Insurance
Is not just for vans… If you are going to use your vehicle for commercial purposes (apart from driving to and from work and clients) then you will need to have special insurance for you and your employees when using it.
Directors and Officers (D&O) insurance
This is specialist insurance and only for limited companies where there is a board of directors and ‘executive officers’. It protects the directors against legal actions brought by shareholders. Take specialist advice. This cover can be added to your Professional Indemnity policy and is offered by our partners ‘Tapoly’.
Special Note: Key person Insurance
For some businesses, very specialist skills or very important individuals could merit being insured against illness or death. Besides being a tragedy this might cause your business financial loss. There are specialist markets for this type of insurance. It is not a common feature for most start-up businesses but can be required by your first major investors.
Now we know what the types of insurance are, let’s go back to the beginning and take that short pause to plan might be required.
Top Tip: If you already have an insurance policy then look and compare quotes every year – there may be benefits for loyalty (No Claims Discounts for example) but it never does any harm to check. Remember, new customers can often get better deals so switching might be a cost effective option!