The legal required business insurance policies vary dependent on the type of business and industry your operate in. However, there are a few individual insurance policies that are legally required when you are operating a business. Failure to comply to the law could lead to hefty fines therefore, we recommend companies should always contact specialist small business insurance company such as ourselves to find out which the business insurance legally required for your specific industry and the way your business operates.
Having a tailored business insurance policy is an excellent way for a business to protect itself. Insurance cover offer compensation for a financial loss so it can be considered an investment toward the security of your business. Insurance covers can also be a lifesavers if your business doesn’t not have the have funds to cover for losses, it also offer peace of mind for you so it means you can focus more on your business than the worry of potential issue that can arise out of your normal business activities.
What types of small business insurance are mandatory?
Employer’s liability insurance is the only business insurance that is mandatory (under the Compulsory Insurance Act 1969). It only applies to those businesses with employees. If you are a sole worker, it is unnecessary to take the policy.
Regulatory bodies may stipulate the need for a particular insurance policy to operate such as professional indemnity. A professional indemnity cover is a requirement for professionals working under a limited company.
What are other types of small business insurance recommended?
1. Third-party insurance
This insurance is also called third-party liability insurance. It covers your business against claims made by third parties regarding injury or damage of property within your business premises.
2. Product liability cover
If you are manufacturing an item that could cause injury in case of a malfunction, then you will need product liability coverage.
3. Tax investigation insurance
It covers time and cost of dealing with HMRC investigation on the business.
4. Professional indemnity cover
For business offering professional services, this insurance protects against claims made by clients arising from professional negligence.
5. Business-specific insurances
There are policies specific to different types of business. For example, trade credit insurance protects against bad debts. Other insurance policies include motor vehicle insurance, directors insurance, and key man insurance.
What does third-party insurance cover?
Many business owners fail to understand this insurance and end up paying lots of money for damages if their policy is insufficient. Third-party insurance has a wide range of cover options available. It is essential to determine the amount of cover you need to safeguard your business against liability. When accidents occur, you want to rectify them as quickly as possible. This insurance cover ensures you do that without worrying about legal fees and compensation claim. Without this insurance, in place, the financial health of your business will suffer in case of a claim.
What does public liability insurance mean?
Third-party insurance offers protection from the cost of claims made by members of the public in case of an injury or damage to their property because of your business. It protects the policyholder from incurring extra costs and expenses concerning accidental injury, loss or damage of property or even death. You can take out third-party insurance as a standalone policy, or you can combine it with employers liability insurance.
Is third-party insurance a legal requirement?
Third-party insurance is not compulsory. However, it is essential if your business interacts with members of the public. Some companies may not work with you unless you have this type of insurance. Consider third-party insurance if:
• Customers or clients visit your business premises.
• You organise events which members of the public are in attendance.
• You run your business from home and clients visit.
• You have a horse riding establishment.
What events can lead to a third-party insurance claim?
Many events can give rise to a claim, the most common ones include:
- Slips and trip: It does not matter if you are on a building site or at your shop trips can happen. Even if you take precautions, you cannot always prevent an accident from happening. Customers could trip over equipment if they believe they hurt themselves due to your negligence they will sue for compensation. In the event, they can prove their case the claim could cost a large sum of money.
- Damage to property: If a visitor loses or damages personal property while on your premises you may need to compensate for the loss. An example is when a laptop is knocked down by your staff. Damages can also arise while you are performing your duties. For instance, if you damage a work surface while installing an appliance may lead to a claim.
- Third-party claims are diverse, and your business may not be able to shoulder the compensation costs and expenses arising from these claims.