If you own a business in the UK, then it is vital that you have some form of business insurance protection. No matter the size of your company, if something goes wrong it could be devastating to your livelihood and the survival of your business. Business insurance protects you against all sorts of events, from theft to natural disasters. It can help you get back on your feet after a disaster or save you when the worst happens.
But how do you know what type of business insurance you need? And where is the best place to shop for the best insurance deals?
This article will give an overview of what business insurance entails and why it’s so important that every UK-based company has the right policies in place.
What is business insurance?
Business insurance is any type of insurance policy that protects you against financial loss if something happens to your business. This includes property damage, loss of equipment, theft, fire, civil liability (for example if someone suffers an injury on your property), vehicle accidents, and many more.
Every business needs to identify which types of insurance they need because, without adequate coverage, a serious issue has the potential to ruin even the biggest, most profitable businesses. It only takes a few mistakes or a stroke of bad luck to lose everything you’ve worked so hard for, which makes business insurance all the more necessary to protect yourself and your business. With so many affordable policies available these days, there is no reason any UK-based company should be without adequate coverage.
What are some of the common issues and risks businesses face?
There is a multitude of potential dangers that could affect the continued existence and success of your business.
Some common issues include:
Theft – Whether you own a retail store, a small restaurant or a warehouse that stores valuable goods, a major robbery could put you in major financial difficulty and make it impossible to keep your business afloat.
Civil liability – If someone is injured on your property, due to an accident of some kind, then the victim could sue you for compensation. This includes slip and fall accidents caused by faulty walkways or uneven surfaces, car accidents involving company vehicles or even a bone somebody’s soup.
Property damage – This can also be a major issue, especially as there are so many potential ways your property could be damaged such as burst pipes, fire damage resulting from arson or electrical malfunctions, vandalism, or broken windows from trespassers and thieves.
Loss of income/revenue– Whether due to a natural disaster, a global pandemic, or the theft of equipment that you need for your business, a long period where your business is unable to operate can result in a serious loss of income.
Vehicle damage or accidents- When your employees use company cars, vans and other vehicles for business purposes, any kind of accident involving them can be a potential legal and financial issue for your company.
What are the different types of business insurance?
There are a number of different kinds of business insurance protection you may need for your company:
Employer’s liability insurance
This type of insurance is required by law for all businesses in the UK with employees – it pays out to any employee who suffers an injury on your property or while they are doing their job.
For example, if a worker falls and breaks their leg while on your premises, or slips and is unable to do any work for an extended period of time, your company may have to pay them compensation which would be covered by your employer’s liability insurance.
Professional liability insurance
This protects against any legal costs or fines suffered as the result of a client or customer complaint about work completed by yourself or one of your employees.
For example, if an electrician who works for your construction company damages a client’s property while installing wiring, it covers any costs incurred for repairing the damage.
Product liability insurance
This protects against damages caused by goods sold from your business. If you sell anything that causes damage through faulty manufacturing, design defects or mistakes on your part when making it available for sale, you could be personally liable if somebody suffers injury as a result of using the product in question.
For example, if you run a furniture shop that sells chairs with faulty legs, and somebody is injured as a result of falling off the chair, you could be culpable for paying compensation for their injuries, pain and suffering. In this case, product liability insurance will be vital to cover the cost of the payout.
This covers any loss to buildings, fixtures and equipment resulting from fire damage, theft, vandalism or other disasters such as floods or storms. It can also include insurance for valuable goods in transit or that are being used outside of normal business hours. It covers all property used by your business, whether rented or not, including land and buildings used for commercial properties like offices and warehouses.
Property insurance is very important for businesses that store large amounts of stock or equipment, and especially for those that operate in isolated locations or those with high crime rates where there’s a high risk of theft.
This type of coverage protects company-owned vehicles against damages caused by collisions, break-ins and accidents while they are out on official company business.
For example, if an employee is using a company car to make deliveries when they are in an accident, then the costs of repairs or replacement needed for that vehicle and any other vehicles or persons involved will be covered. Businesses with multiple vehicles often choose special fleet insurance which covers all of their vehicles and also permits every employee to drive.
Business interruption insurance
This type of policy covers you against any loss of income due to property damage resulting from fire, theft, storm damage and similar disasters which cause serious interruption to your business operations. It only applies if there’s a minimum period where your business is unable to function properly as a result of these issues. This insurance does not usually cover lost stock or equipment during this time.
How can I calculate my business insurance needs?
The first thing every UK business with employees must have is employer’s liability insurance, so before you even start considering other potential policies, make sure you have this in place. A lawsuit involving an employee could not only end up costing you an enormous amount of money, but it could also do irreparable damage to your business’s reputation so make sure you are fully covered.
Next, make a list of all assets and property owned by your company, as well as any items that may be hired or borrowed which you need to take out separate insurance policies for, such as tools or equipment used outside normal hours. The type and cost of each item should also be considered when calculating how much it will add to total business insurance costs.
Once you know what’s needed then work on producing an estimate on the value of everything that needs coverage as this can help with comparison shopping among different insurers later on. You’ll also want to consider adding extra protection against loss – whether through theft, accident or other issues – and how much it will cost.
Then, you will need to assess the potential risks involved with normal business operations. For example, if your business manufactures or sells products, do you need product liability insurance in case something goes wrong? Do you have any company vehicles which could potentially be involved in an accident? Are your offices prone to natural disasters or a high risk of burglary?
Once you have identified every potential issue, you will then have a better idea of what levels of coverage you need.
How much will business insurance cost?
Business insurance costs vary depending on what kind of business you have, where it’s located, the types of policies you need, and your chosen cover levels. For example, it can be expensive to insure a construction company that operates in an area with high crime rates, while a small handmade jewellery store may only need minimum coverage.
One way to keep down overall premiums is by maintaining good safety records and following all current laws regarding health and safety at work. You’ll also want to make sure employees know about these policies and are fully versed and trained in these matters.
You can also help to keep premiums low by shopping around for insurance quotes. Prices can vary widely between insurers, so it’s always worth comparing at least three different options before making a final decision on who you go with.
How can you find the best business insurance deals?
To find the best business insurance deals, you need to know what’s available and shop around for quotes. Even if your current insurer can match a competitor’s prices, it may not provide the same level of service and protection so make sure you take this into consideration.
When looking at different insurers’ policies, try to avoid getting caught up in jargon or technical terms that don’t apply to you, as well as ignoring any extras which aren’t necessary such as personal accident cover on company vehicle insurance when it will only be employees using these vehicles for business purposes.
Finally, it’s important to do thorough checks on the financial standing of any potential insurer you’re considering working with. For example, if a company doesn’t have enough money in reserve and can’t meet its liabilities then it could go bust leaving your business without cover which could be potentially disastrous.
Who is covered under business insurance?
One of the most important things to consider when taking out your business insurance policy is who or what will be covered by it, as well as any limitations that may apply. For example, some policies may cover your partner’s liabilities while others do not, but if they are included then this could mean thousands of pounds worth of protection for free!
Whether you plan on hiring employees at a later date should also be something taken into account during your research so make sure you consider all possible options available. This way, there won’t be any nasty surprises down the line when an employee causes damage which wasn’t covered.
How do you make a claim on your business insurance?
If you need to make a claim, the first thing you need to do is contact your insurer. If it’s an emergency situation or if there’s been serious damage then this should be done as soon as possible. Your provider will ask for proof of what happened in order to process your request and they may set up a temporary replacement policy while yours is being reviewed, so it may also benefit you to have extra coverage already in place just in case.
Most claims will be paid out within 21 days but every individual business insurance policy has its own terms and conditions which should state exactly how long the compensation payout will take.
What is not covered by business insurance?
It’s important to remember that business insurance only covers certain types of loss or damage. It will not cover other things such as a bad debt from a customer who has gone out of business themselves so do be aware of the limitations and exclusions which may apply before you take any policies out.
It is also vital to check exactly what type of losses your policy does cover because it varies between different providers. For instance, some policies may pay out if equipment breaks down but others will require this equipment to have been damaged by an external source for you to claim compensation. In addition, there are often minimum amounts payable under each insurer’s terms and conditions so read these carefully too.
When it comes to running a business you should always expect the unexpected. Choosing the right business insurance protection will ensure that whatever happens, you will be fully covered and your business will be safe. Just make sure you identify every potential area of risk so that you can protect yourself and your business no matter the issue.