Business insurance is made up of different types of insurance which protects businesses from losses due to events that may occur during the normal course of business. Whether you’re a sole trader working from home or someone with multiple offices business insurance provides a way to protect you and the people within it.
There are many types of insurance for businesses which include professional indemnity insurance, office insurance, public liability insurance and employers’ liability insurance.
No two business are the same. It is important that companies evaluate their insurance needs based on potential risks the business will face in terms of accidents, damage, theft and legal disputes, which can vary depending on the type of environment in which the company operates.
Business insurance is there to protect your business and the people who work within it if your company faces loss, damage, injury or legal action.
What type of business insurance do I need?
The cover you need depends on the type of business you operate. Depending on what needs your business has will depend on what type of business insurance cover you will need. The right level of insurance is crucial for protecting your business. Certain types of business insurance will not only cover your business against loss or damage to your equipment or work premises but it will also cover your business for things like compensation payments and legal costs. A good business insurance policy would also cover any potential loss of profit that your business might suffer as a result of an insured event such as fire, flood, or other unforeseen circumstance. This could then help your business get back on its feet.
Is it a legal requirement to have business insurance?
This again depends on business you have. A legal requirement for most businesses that have staff is Employer’s liability. Other insurance such as professional indemnity may also be required by regulatory bodies. Without having a certain insurance in place, you may also not be able to sign contracts.
It is always worth looking into taking out business insurance even if it is not compulsory as business insurance will be there to help you if anything goes wrong.
What business insurance do I need for a small business?
All businesses, even home-based businesses need to have liability insurance. If you are employing any members of staff then it is a legal requirement to have employer’s liability insurance. Depending on what your small business is will depend on exactly what business insurance you will require. Professional liability insurance is not a compulsory business insurance to have, however it will again help if anything were to go wrong.
4 types of business insurance
Professional liability insurance
Professional liability insurance covers legal costs and expenses incurred in your defence in the event that a client loses money due to any mistakes or failure to perform.
Professional indemnity insurance covers you for mistakes such as loss of documents or data, professional negligence or breach of duty or care (a mistake in your work or providing bad/wrong advice), and unintentional breach of confidentiality (sharing confidential information without consent).
Professional liability insurance is also often referred to as professional indemnity insurance or PI insurance.
Some careers which may require professional liability insurance are Doctors, Teachers, Brokers, Accountants, Therapists/Counsellors.
Employer’s liability insurance
As an employer you are responsible for the health and safety of any staff you wish you employ whilst they are at work. You may be held liable if an employee is to fall sick or injured at work. Unfortunately, employer’s liability will not prevent an accident from happening but it will protect you from compensation and legal fees in the event of one.
Employer’s liability insurance can cover the costs of compensation and legal fees If an employee or ex-employee claims compensation due to an illness or injury which they believe was caused due to your business.
This is one of the covers that you will be legally obliged to take out if you have any employees. You can be fined £2,500 every day if you are not insured correctly.
Public liability insurance
Public liability insurance can cover you for legal costs and compensation payments if a client or member of the public makes a claim due to suffering injury or property damage as a result of your business or a product that you have supplied.
Examples of the types of claims that public liability can cover are:
- A slate/tile were to fall from the roof and hit the post man while on your property.
- A member of the public to slip on wet floor whilst on your premises.
- A member of the public to fall over a lose wire that may be on the floor in the premises.
- A visitor slipping down the office steps at your property.
Commercial property insurance
Commercial property insurance will cover the costs of repairing or rebuilding your business premises against risks such as fire, explosions, burst pipes, storms, theft and vandalism. It also covers everything within the property and just outside the property such as computers, important documents, equipment and furniture, and exterior signs.