Essential Business Insurance Guide

Business insurance

What are the main types of business insurance?

Keep calm and insure

Sorting out your essential commercial insurance can be quite easy to forget, particularly if you are starting in a new industry or profession. In the early stages of a company or in harsh economic times, the extra burden of an insurance policy can also be off-putting.

But certain types of tradesman or professionals would not be hired without insurance and most business owners just have too much to lose in the early stages not to be adequately covered.

Accidents resulting from your business activities could happen… You need Public Liability

Whenever a business involves contact with the public or third parties, there is the possibility of an accident happening that may result in injury to that person or damage to their property.

Public liability insurance is the type of cover that would protect you from any successful claim made against your business and would cover any related costs; for example compensation payouts, the cost of repairing damage, or legal expenses incurred in defending the case.

Professional Indemnity

Self-employed professionals who provide consultancy services to businesses or individuals in areas such as consultants, trainers, tutors, architects and project managers; those who consult on health and fitness such as personal trainers; or those who offer a service such as photographers or beauty therapists, should consider taking out Professional Indemnity insurance.

PII protects professionals from situations where they have been negligent or where there have been serious mistakes in their work, and as a result you have been faced with paying a claim for compensation. Any large payouts you might have to make could seriously cripple or even close down your business, not to mention the legal costs involved. Professional indemnity could cover these costs, ensuring your business doesn’t lose out.

Does your business have employees? You need Employer’s Liability

If your business employs staff, even on a part-time or temporary basis, you must take out Employer’s Liability Insurance – it’s the law. You legally need to have a minimum of £5m cover, however many insurers will automatically put you down for £10m, so if you only have 1 or 2 employees you may want to double check how much you’re paying for.

Employer’s liability insurance may seem like a nuisance and unnecessary extra expense but the law is there to protect you and your business. If an employee is injured or becomes ill in the course of their work, and it can be proven as your fault, you could face a claim for compensation. This policy will ensure that your business is protected from this cost. Another good reason for making sure you comply with this law is that there is a £2,500 fine for each day you are in business without cover.

There are some notable exceptions to the law:

1. If you are not a limited company and you only employ yourself or close family members.

2. If you are a limited company and have 1 other employee who owns 50% or more of the share capital.

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Additional business covers

There are other covers which can be equally important, depending on what your business does.

Business Interruption Insurance

This cover compensates your business for lost income when your business is forced to suspend due to an event that is stated in your policy. It could be for an incident as small as a power outage lasting a couple of days that prevents your shop from opening, or one as big as a fire on your premises which could prevent your business from opening for weeks or months.

Stock cover

If your business holds any stock on its premises, insurance can be taken out specifically to protect it from theft, damage or destruction. There may be certain conditions attached to this type of insurance which dictate the manner in which the stock has to be stored. This is especially the case with specialist stores (antique shops for example) or flammable stock like books or paintings.

Tools cover

If you are a tradesman, this can be a vital cover. Good quality tools used by professionals are often very expensive and sometimes take time to replace. Any loss would be detrimental to a business where clients expect reliability.

Theft by employees

As well as general theft from outside parties, you can get cover protecting your cash, tools and stock against theft by employees.

All the necessary covers under one policy

This seems like a lot of different insurance policies to undertake and one would assume that the cost for so many would be prohibitive. Many insurers, however, will include all of them under one policy and by doing so can cut the cost down. This also makes it easier when the time comes to renew.

Companies such as Simply Business can help make the buying process easier by offering a range of online quotes to compare from leading insurers, which are based on your individual information. You can buy instantly online and view the policy document attached to each quote given, to ensure that you are covered in the right areas.

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