Insurance & Cover
Choosing Business Insurance that’s right for you
When you start your own business there are many important things to consider:-
- What sort of company should you form?
- Do you need to hire staff, and how many staff members do you need?
- What type of business bank account will suit you best?
The one thing that many new business owners put off thinking about, is what kind of business insurance they need. Buying insurance can be confusing, complicated and, let’s face it, pretty boring! But it is an essential part of any business and so it’s important to get it right. You will probably need more than one kind of insurance for your business.
The types of insurance businesses need can be divided into three distinct categories:
- Liability insurance
- Insurance for any business property and buildings
- Contents cover for any business assets and equipment.
So here is a breakdown of all of the different kinds of business insurance products available, to help you decide which kinds of business insurance will be right for your business.
1. Employers' Liability Insurance
If you employ even just one member of staff then you will need Employer's Liability Insurance. According to the Employer’s Liability (Compulsory Insurance) Act of 1969, the current minimum amount of cover you are required to have is £10 million. Employers Liability Insurance covers any bodily injury, illness or disease that your employees sustain during the course of their employment with you. Almost all businesses (other than if you are operating as a sole trader and working out of your own home) will require Employer's Liability Insurance.
2. Public Liability Insurance
Public Liability Insurance is insurance cover that is designed to protect your business if any other individual or company claim to have suffered damage (either to themselves or to their property) because of your business. If you run any kind of business where you come into contact with members of the general public then you should have public liability insurance: although it isn’t required by law like Employers Liability Insurance, without it you could face a costly claim for compensation that you are unlikely to be able to afford. That kind of claim would bankrupt your company: so it makes much more financial sense to investigate having the right kind of insurance instead. According to finance website money.co.uk, public liability insurance can cover "everything from someone slipping on a wet floor in your shop to a roof tile falling from your premises onto a client’s car in your car park." No matter how careful you are, accidents can and do happen and it is Public Liability Insurance that will protect your business from the results of this.
3. Product Liability Insurance
Product Liability Insurance is a more specialist kind of insurance aimed at businesses who sell products that could cause damage to the users who buy it if it is faulty, or if anything goes wrong. Businesses that supply products such as software or machine tools, are at risk if a faulty of court action if that product causes damage or injury.This is what product liability insurance will protect you from. If you are working as a hairdresser or setting up your own sweet shop then it is unlikely that you will need product liability insurance. However, if you are hiring mobility scooters or selling heavy machinery then product liability insurance is a must have insurance for you.
4. Contents' Insurance
If your business carries stock or if you have business premises then you really should consider purchasing contents insurance. There are many different aspects of this content insurance to consider, and the bigger your business the more complicated this will be. The first thing you should ensure you cover is any stock held within your business premises: all of the stock you carry should be covered for its cost price (that’s the amount it cost you to buy it). Because you can’t control anyone’s malicious intent towards your premises, you should ensure that all of your business premises contents and stock are covered against theft under your contents insurance policy. Most policies will cover your premises against theft provided providing there has been forcible and violent entry to or exit from the premises, and is evidence to show this. A standard business contents insurance policy won’t usually protect you from theft within your company (employee dishonesty, for example) but if this is a concern for you then you can arrange a separate policy to cover this with your insurance company.
5. Personal Assault Cover
If you run a high risk business, such as a petrol station or another company that tends to carry large amounts of cash on the premises then you could also consider including personal assault cover in your business contents insurance: this will provide compensation both for you and any of your employees if you are injured during an attack or raid on your premises during which the attacker is attempting to remove cash from your premises.
6. Starting a Business From Home
Finally, a word on the kind of business insurance you will need if you’re starting a business from home. When it comes to insurance, working from home usually needs the same kind as working from any other business premises. You will still want to protect your staff, cover yourself against public liability, and protect any of your stock and contents. One additional thing to consider, however, is your home buildings insurance. Many home insurance policies won’t cover your home if you are using it as a business premises, so make sure starting your own business won’t invalidate your current policy. If it will, look for an insurer that will cover your home as a business premises too: this may be slightly more expensive than standard home insurance, but will ensure both your home and your working environment are protected should your premises be damaged by flood, fire, or theft.