Can I save on business insurance when I’m in lockdown?

“Or, Do I need the same insurance in Lockdown?”

Like all small businesses when cash flow is tighter than ever during this lockdown, what should we do about insurance? Here we look at core business insurance (liability cover) and provide some suggestions that might save you money.

Do I need….

Employers Liability? – YES!

Insurance is cover required by law for your registered workers – the fines for non-compliance are very severe (£2,500 per day).

What if employees are furloughed and so not allowed to work – is there a need to keep up the Employers Liability? Still yes!

Employers’ Liability (Compulsory Insurance) Act 1969, updated by the Employers’ Liability (Compulsory Insurance) Regulations 1998 set the requirements.

Currently, there has been no amendment and so you should regard your employees as zero-hour contract workers: contracted and available return to work.

Public Liability? – Maybe

No rules to stop you suspending or terminating cover and to seek a rebate of some premium. However, you must understand two risks;

If your previous work causes an injury or damage during the period of suspension. a claim might not be covered or be open for challenge.
When cover re-starts, all work done before the “new” start date may be excluded or subject to lower limits etc.

Always shop around when renewing your insurance – see the SUGGESTIONS BELOW.

Professional Indemnity – the factors are basically the same but..

When or how claims are made is more fluid. Your decision to suspend is trickier – perhaps your adisory work was fine in business as usual but, is now wrong in lockdown . Could your client claim it now caused them a financial loss?

Before suspending or terminating cover take advice and look at:

The ‘run-off’ provisions of your policy to ensure that you are covered for future claims arising out of advice you gave while it was running.
Check if by terminating your policy mid-term it changes your insurers obligations going forward. When re-starting a policy, your insurer will probably insert a date (a “back stop” to avoid insurers being liable before the back stop). They will also require more stringent checks to ensure that you are “unaware of any circumstances which may give rise to a claim”.

NB. Some Professional Indemnity packages, like ours with partner Taploy, can offer a short term policy designed to provide cover for when you work as often as you work and avoid the potential unnecessary expense of an annual policy. Read more generally about professional indemnity.

IMPORTANT SUGGESTIONS

Before you cancel or delay your business insurance:

Talk to your broker or insurer directly and ask for a mid-term adjustment or new quote! Why?

Because if your risks have changed, the premium could alter substantially if;

Your staff numbers have reduced significantly,
Your business changes (e.g. from a mix of operations and administration work to online administration only),
If your turnover projections are vastly changed (lower or higher).

If a substantial part of the insured period remains, 3 months of lockdown or reduced/changed activity could make a significant difference to your premium.

Have a constructive conversation with your insurer about your circumstances and what you should pay. We’ve written a whole blog about getting the best personal and business deal.

While it is not easy to forget the vital work going on by many people during this lockdown, we must also remember the importance of micro-businesses to our economy. If you’ve read this, you may be thinking about not returning to self-employment after lockdown – just remember, when it is time to get back to work:

OUR COUNTRY WILL NEED US, ALL OF US! — TO GET BACK TO WORK WHEN IT IS SAFE