BIBA’s executive director covers the compulsory insurances that all small businesses need to be aware of – including a few which may surprise you.
For small businesses sufficient insurance is vital and most startups will agree that right from the beginning it is absolutely necessary to have in place insurance cover for your bricks, mortar and other physical property. But, that’s not all that needs to be considered.
Despite the great value and protection the right cover affords, insurance can be something of a grudge purchase for many businesses and indeed consumers. In light of this it’s worth noting that in the UK there are certain insurances that are compulsory by law, where there is a legal requirement to buy cover.
The most well-known of these compulsory insurances is motor insurance; more specifically, covering your legal liabilities whilst using a motor vehicle. This means that for any vehicle used by you or your employees in connection with your business you must have insurance in place for damage or injury that you cause to other parties or their property whilst using it.
Make sure that your cars, vans or motorcycles have the right level of cover – your insurer will need to know that the vehicle is used for business purposes to ensure your cover is valid. Did you know that in 2011 the law changed meaning that that you must have motor insurance continuously in place unless the vehicle is declared off the road by means of a Statutory Off Road Notification (SORN)? Talking to an insurance broker will help you get the cover that most closely meets your needs.
It may be less obvious that it is also a legal necessity to buy insurance that protects any employees you have. Employers’ Liability cover is another compulsory insurance and it provides protection for you as an employer against any costs and compensation awarded against you because of injury to an employee that you are responsible for.
When considering whether you have employees, the law states that you must count people you employ on temporary contracts, on internships or as volunteers and ensure the correct cover is in place. The amount of cover or limit of indemnity that you buy is often set at £10m as standard but you must, by law, arrange at least £5m cover. Examples of employers’ liability in action can be seen in this piece by Simply Business’s Keith Lynn.
If your company uses items such as forklift trucks, pressure plants (e.g. boilers) and ventilation systems – not to mention having a lift in the premises, then there is also a legal requirement to ensure that these pieces of equipment are inspected regularly by a competent person.
Your broker may also recommend that you take out a specialist engineering policy which covers loss or damage to this sort of equipment, breakdown, inspection and any loss of profit arising from a breakdown. The inspections do not have to be undertaken by your insurer but they or your insurance broker can point you in the direction of someone who can give you further advice on the detailed legal requirements as well as carrying out the inspection.
And finally, if you happen to be in the business of teaching horse riding, the Riding Establishments Act 1970 makes it compulsory to have public liability insurance, while aircraft operators must also have liability insurance in place as required by the Civil Aviation (Licensing) Act 1960.
So if you teach horse riding, drive a car, employ anyone, have a lift or an industrial boiler in your premises or even run an airport, make sure you talk to your insurance broker.
Graeme Trudgill is the executive director of the British Insurance Brokers’ Association (BIBA).
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