When you begin your entrepreneurial journey, you do so with confidence and optimism – your days are packed with planning, pitching, networking and racking up hours round the clock to get your ideas off the ground. The learning curve is steep but it’s exhilarating too.
Of course, you wonder how you’d feel if an unforeseen hiccup forced you back to the nine to five – but you put thoughts like that to the back of your head – you’re too busy building your business right now, you don’t need to worry about protecting it. And besides, what could possibly go wrong?
Sound familiar? I’m not surprised. People often tell me that sorting out their insurance is on the “to-do” list but it’s a priority for another day. In saying so, it’s clear they’re not trying to shirk a responsibility – they simply don’t realise they’re vulnerable to claims or even in breach of the law before their business is fully off the ground.
Finding out just a little too late that you’ve not properly protected everything you worked so hard to build can be a devastating blow, particularly when all essential insurances are less expensive than you might assume and quickly and easily arranged online or over the phone.
But how do you pick the business insurance that’s right for you?
Put simply, it’s important first to understand what insurances you’re legally or contractually obliged to have. From here, it’s worth knowing what you should responsibly consider, and finally you need to think about the extra tailored options that will offer added benefit to your business.
Your business is unique, so your insurance package should be too, but to here are my top five insurances every successful business needs to think about.
(1) Employer’s liability insurance: This is a must for anyone with staff, contractors, sub-contractors or interns and your key legal obligation. It protects you should anyone claim for illness or injury as a result of working for you, and – as trading without it is illegal – failure to secure cover will leave you open to fines of up to £2,500 per day.
(2) Public liability insurance: Often included as a contractual obligation, this covers you against claims that your business activities caused accidental damage or injury to a third party or their property.
(3) Professional indemnity insurance: Particularly important for companies that offer professional services and advice, this protects you if a client claims you’ve made a mistake in your work or given bad advice and is a contractual requirement on certain projects.
(4) Personal accident cover: Often overlooked, this is important for self-employed people and protects you if an injury stops you from working.
(5) Cover for tools, plant and equipment: As a new business owner, this will cover any equipment you rely on for your work.
If you work from home, you should check whether your home insurance covers any business activity. And if you drive your car in connection with your work, you should make sure your car insurance includes business use.
Specialist commercial property insurance and commercial vehicle insurance is available for businesses too and like all of the insurances mentioned above, can be tailored to meet your specific needs.
Of course it’s true that you never really know how well your insurance will work for you until you need it, so you’d be right to speak to a range of providers about what they’ll offer you and at what cost. Any good insurer will talk to you about your business and the specific risks you face to come up with a tailored package that’s right for you – including everything you do need and leaving out what you don’t.
Darrell Sansom is managing director at AXA Business Insurance, a provider of business insurance for sole traders, self-employed people and small to medium-sized enterprises.
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