Hannah Tonge of PolicyBee business insurers offers advice on safeguarding your business with insurance cover
A claim successfully brought against you following an accident, for example, could put you out of business. You may also face significant personal liability. In some circumstances, not having certain forms of insurance is illegal. There are a few types of insurances that could enable you to carry on trading should the worst happen. It's important for all businesses to assess risk and to seek sufficient cover; it grants peace of mind.
If you have staff, you must have employers' liability insurance, which must be in place as soon as you take people on, paid or unpaid – including work experience placements. Also, if your business operates vehicles, then you must have third-party motor insurance.
It covers damage to third-party property and injury to non-staff members caused by you or one of your employees. Examples could include a visitor to your premises tripping over and suffering serious injury. Public liability insurance provides protection.
It's for businesses that give advice or provide a professional service to clients. It insures against lawsuits brought by clients and associated third parties, who claim that your mistake or poor advice cost them money. In some instances, it can cover the cost of rectifying mistakes and agreeing settlements with clients to avoid court altogether. It can also cover your fees if, in a dispute, your client withholds payment.
It's wise to insure the building, its fixtures, fittings, equipment, machinery or tools, plus, if relevant, your stock against fire, theft and flooding. Generally, most insurers offer preferable rates on this if bought with other business insurances - such as public liability insurance, for example.
This can cover the additional costs of operating your business if you can't use your premises. If after a flood, for example, your office is on the third floor and is unaffected by actual water damage, but you can't reach it for two weeks, business interruption insurance would cover the additional costs of setting up a temporary office elsewhere and hiring equipment, etc. You can also insure for loss of profit if you can't trade for reasons beyond your control.
Key man insurance covers the cost of keeping your business running should something happen to you or an important employee. Alternatively, accident and illness insurance would pay the business a pre-determined weekly rate should a team member become incapacitated and unable to work. This could either be used to pay them sick pay or ease the burden of hiring interim cover.
Online research can provide leads, but recommendations from people you trust are better. Look beyond price when making your choice. You need a broker with the right motivation. Will the person you first speak to look after your policy or simply be there to close the sale? Do they have the right incentive to ensure the insurance they sell you is right for your circumstances? And will they have the knowledge of your business to help you make the right choices as your enterprise develops?
Ask if the broker is regulated by the Financial Conduct Authority (previously the Financial Services Authority) as an 'advised' or 'non-advised' broker. An advised broker will use their knowledge to select from a range of products based on your needs. They are also regulated to give advice about insurance and answer any questions you may have. Non-advised brokers and insurers will generally have one product to sell and cannot answer questions or give advice.
It's worth investing time so you understand the cover you're being offered. There's a lot of jargon in the market and different policies have different boundaries and conditions. A good broker will talk you through the complexities, have good market knowledge and help you understand which solutions are right for you so you can make informed choices. Some day you might be really glad you did.