In our last blog - The A to Z Guide to Start-Up Business Essentials we covered everything from budget setting to communication to filing!
Over the next few weeks we are going to focus in on some of the key points and today we start with “Business Insurance”.
As we have already mentioned - ACCOUNTABILITY is imperative when you run your own business and business insurance is something that is easy to overlook amongst the myriad of business essentials that you have to consider. However not only is it a necessity - it could save you thousands of pounds.
Every business is different, so not all insurances will apply to you. For example, if you work in an office and catch a train to work every day, you wont need to include car insurance on your list! However, you are legally required to take out some insurance when you run a business, failure to do so could result in hefty fines and could put your entire operation at risk.
With so many different types of insurance cover available for businesses, here’s our guide to the “must have” insurances and the “should have” insurances. Please note that this is a guide only, we always say seek professional advice!
Business Insurance Policies You Are Legally Required To Have
Employers Liability Insurance
From the minute you take on your first employee, you are required by law to take out employers liability insurance. This will protect your employees if they fall ill or are injured in the course of their work. Your insurance certificate must be displayed where your staff can see it. Even if you don’t have any full-time employees, and just occasionally hire staff, use temps or seasonal workers, you must take out cover.
You don’t need employer’s liability insurance if:
Your limited company has just one employee, who owns 50% or more of the share capital (i.e. you).
If you are a sole trader and do not employ anyone, or you only employ close family members, you should also be exempt.
You can be fined up to £2,500 per day if your business doesn’t have a suitable employers liability policy. The size of the potential fine dwarfs the cost of cover so make this your first call!
Public Liability Insurance
Public liability insurance is NOT required by law. However, if members of the public come to your place of work, or could be hurt in any way by something your business does, it’s a good idea to have cover. Depending on the type of business you are in, you might find that some organisations will require you to have public liability cover before giving you a contract or allowing you to operate on their premises. A good example of this is if you have a booth at a trade show, the organisers may request you have public liability insurance at the point of booking. Public liability insurance will cover you for any damages claimed, plus legal representation.
Buildings Insurance For Your Premises
If you own your own commercial premises, you must protect this in the same way you would protect your home. At the most basic level, this means a business buildings insurance policy will cover any damage to your premises in the event of a fire, flood or some other catastrophe. Although it’s not obligatory, it makes sense to take out cover for fixtures and fittings and any stock you might have on your premises. Most commercial property insurance policies will allow you to include these options along with the basic buildings insurance.
Motor Vehicle Insurance
If you operate company vehicles, you must have at least third party insurance, and preferably fully comprehensive. Remember employees are less likely to look after their company vehicle, so you may find yourself claiming on your policy more often than you would expect to with a private car.
Industry-Specific Insurance Policies
If you are part of a recognised profession, check with your industry body what insurance policies they insist, or recommend you hold. For example, solicitors are required to carry an insurance policy in order to practice law.
Business Insurance Policies You SHOULD Have
Professional Indemnity (PI) Insurance
Professional indemnity, or PI insurance, gives professional businesses protection against claims made by their clients, for any damage caused by professional negligence. Many firms - in particular, the larger organisations, now require you to have PI cover before they will hire you. With this being a common practice in many industries, professional indemnity insurance is effectively a must-have insurance for the majority of contractors, consultants and freelancers. Even if you’re not required to have it by your clients, it is advisable to have professional indemnity insurance if you offer any kind of service to businesses, or the public.
Directors & Officers insurance
Directors & Officers insurance covers the legal liabilities you have as a director of a limited company and any legal costs if you get something wrong. This type of cover is also frequently referred to as D&O insurance.
Employee Travel Insurance
If you require your employees to travel abroad, you should get them well insured with a reputable company that will look after them in an emergency. Remember to check that their luggage, money, business phone and any laptop will be covered.
Product Liability Cover
If you make, repair or sell products, you could be held liable for any injury or damage caused by defects.
Pollution Risk Insurance
If you manufacture anything and there’s any risk you might pollute the environment, this will cover the costs of any clean up operation, plus claims against your business.
The following insurances are business insurance policies you could buy and fall into the category of “industry Specific”
Intellectual Property (IP) Insurance
Much of the value of many modern businesses is made up of intangible assets such as Intellectual Property.If your business is creative or innovative in any way and relies on any patents, trademarks or designs, you might want to consider protecting yourself.
Key Person Insurance
If your business would grind to a halt if you or another employee was badly injured or left incapable of working through long term illness, this will protect the business against loss of revenue while a replacement is found.
Business Continuity Insurance
Also called “Business Interruption Insurance” this will protect you against any disruption that could lead to loss of revenue, such as a major catastrophe. You should aim to cover events not already included in your other insurance policies, or where there will be a longer-term disruption such as total loss of premises.
Trade Credit Insurance
Will pay out if you have a bad debt. Definitely worth looking at if you sell a small number of high value items.
Glass & Sign Cover
If you have a shop with a large window or expensive signage, it may not be covered by other policies if it’s destroyed by vandals.
Plant and Business Equipment Cover
If you rely on key expensive machinery, get it insured in case it’s damaged or stolen.
Goods In Transit Insurance
If you shift large amounts of stock around, this will give you extra protection from accidents or theft.
Money Insurance
If you hold large amounts of cash or other valuable documents, this may offer you some protection against loss or theft.
Fidelity Guarantee
This cover protects your business against loss of money or stock if one of your employees is dishonest. It’s unlikely to be cost effective until you have a significant number of employees.
Engineering Insurance
Provides cover against electrical or mechanical breakdown of essential equipment.
So as you can see, there is a lot to consider when it comes to insurance for your business. From our experience, much of your research on cost and due diligence can be done from the comfort of your laptop and spending time on sites like Money Supermarket and Go Compare (Obviously other sites are available, but these are the most popular)
However, if like many business owners, you find it all a bit overwhelming 1st Thought Business Support can come to your rescue. One of our key USP’s is
“That we provide you with operational assistance, directly to the heart of your business, taking the stress out of your everyday tasks and enabling you to concentrate on the success of your company”
With our vast network of contacts and solid business acumen, we can prepare everything that you need in order to be successful in your chosen path, as well as keeping it running like clockwork. We excel in meticulous planning, and no stone is left unturned.
So relax and let us sweat the small stuff, so you don’t have to!
Thanks for reading :)
Georgia
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