Finding the right policy can be tricky as an insurance rookie. In truth, large swathes of the industry are still pretty dusty, a collection of small businesses calling it “outdated, exclusive and confusing” when we asked them back in 2013. Only one in ten had received clear and concise information when speaking directly to insurers, with three quarters stating they found written insurance documents “hard to understand”.
Off the back of this, we launched an insurance manifesto outlining a challenge to the industry, amongst our key commitments greater honesty and simplicity. In that spirit then here’s a beginner’s guide, built for you businesses still unsure about insurance…
Public liability
Important for any business that interacts with the public – public liability insurance can cover you if someone is injured or their property is damaged and they blame your business.
For example, you’re an IT consultant and you spill coffee on your client’s hardware. Your client demands compensation.
Do you need this cover? Ask yourself:
- Do you ever have visitors to your business premises?
- Do you work on client sites?
- Is there any chance that an accident could happen?
- Do you have contracts that require this cover?
If you’ve answered yes once or more then some public liability cover would probably be wise.
Employers’ liability
Required by law if you have any employees, this covers any claims made by your staff for injury or illness that they think has been caused by their work or workplace.
For example, an employee hurts themselves when they trip over some loose carpet in their office. They claim compensation from you as their employer.
Do you need this cover? Ask yourself:
- Do you have one or more employees, not including close family members?
- Do you deduct National Insurance and income tax from the money you pay your employee(s)?
If the answers are yes, you’re probably legally obliged to take out at least £5m employers’ liability cover.
Professional indemnity
Insurance that covers you for mistakes you make in your work that results in financial loss to your client, particularly if you’ve given them advice or provided a service.
For example, you’re a web designer but you use images on a client’s website that you don’t have the rights to use, and the copyright holder sues the client. Your client seeks compensation.
Do you need this cover? Ask yourself:
- Do you give professional advice to clients?
- Do you provide your clients with a service?
- Do people make decisions based on what you tell them, taking financial risks?
- Are you an accountant, architect, management consultant or IT contractor?
If you’ve answered yes once or more then it’s probably wise to put some professional indemnity insurance in place.
Additional covers like protection for stock, business interruption, equipment, contents and buildings can also be essential, should you hit a crisis that threatens your trade. So try and weigh up the potential risk, and decide what’s important to your business.
Hopefully that clears things up a little. Whilst from the outside it can look intimidating, insurance is really pretty easy, and covering your business needn’t be a daunting prospect.
Image: Shutterstock
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