When running a business there are many insurance options that need consideration, from legal requirements such as employer’s liability insurance and fleet insurance, to the basics of property insurance and public liability insurance, and then those that are more down to personal choice such as directors and officers liability insurance, industry or product, or professional indemnity insurance.
The type of business insurance policy that you choose may depend on the size and type of business that you run, your budget, and if your customers have any insurance requirements on the cover that you have. Some contracts may stipulate a certain level of coverage in different areas which will of course be your starting point for how much cover is necessary.
There are many risks and alternatives to consider to ensure your business is covered in the event of some form of disaster, so here are some tips in each area to help aid your decision-making.
Employer’s liability insurance or Worker’s compensation
Once your business employs a member of staff you will need to take out insurance to protect you against a claim for injury or illness that is thought to be covered by the employer’s negligence. Whether you employ anyone full-time, part-time, contracted, voluntary helpers or self-employed under your supervision then you are responsible for their welfare. There are many reasons for needing employer’s liability insurance.
In the UK Employer’s liability insurance is a legal requirement and you could find yourself in trouble if you don’t have this as a business. Whereas in the US Worker’s compensation insurance requirements vary by state.
Public liability insurance
Do clients visit your premises? No matter if your business is a small home-based business or a large retail outlet and you have customers setting foot on your premises then it will be important to get public liability insurance cover. This is not a compulsory insurance, but will cover you if anyone suffers and accident or any type of loss whilst visiting your premises.
Home business insurance
If you run a business from home then your standard home insurance will not cover you in the event of an accident. It is important to make your insurance providers aware of this fact so they can ensure you are covered for business use and evaluate any additional risk. There may be additional content requirements also such as to cover loss of stock, equipment or even use of equipment or tools away from home.
Any vehicles that are used for business purposes need to be covered by motor fleet insurance. Fleet Insurance covers both small and large fleets of commercial vehicles and it might be a surprise to know that you can insure from as little as three vehicles upwards on one fleet insurance policy. There are many types of fleet insurance but a specialist insurance broker can advise and offer their expertise to make sure you have the right fleet vehicle insurance in place when you need it most, as well as advising on how to keep your fleet car insurance premiums down.
Could you afford to replace all of your business property, equipment or stock in the event of it being destroyed, lost or stolen? Property insurance will ensure that you are covered should any such event occur. It is important in this situation that you calculate your building and contents insurance accurately and don’t under-insure. As many as 80% of UK businesses and 75% of US businesses are currently underinsured which can result in a huge aftermath of losses. Make sure you also consider cover for business interruption whilst either property is re-built or you recover from your trading loss in the event of a disaster, and don’t forget to add on any significant new purchases to your policy over the period.
Directors and Officers liability
This is more commonly a consideration for larger businesses which may require financial support in defence against investigations into the behaviour of their executives, however smaller businesses are equally as at risk. Directors and Officers liability insurance will cover you for any investigations that may come about into the behaviour of your executives for alleged wrongful acts which could reach into thousands or even millions in compensation.
Industry or Product Insurance
If your business creates products that could potentially injure someone or be at fault then product liability insurance will protect you in this area. Some clients doing business with you will have this as a standard requirement before accepting your products for sale so often insurance in this area is not by choice.
Different types of industry may also have specific types of commercial insurance available such as tradesman, contractors, engineering, or retail etc. It is worth approaching an independent advisor for advice in this area.
If you operate in a business field that offers advice such as financial advisors, business consultants, accountants or architects, then professional indemnity insurance might be for you. Professionals are effectively selling their knowledge and expertise and in some cases even when you think you haven’t done anything wrong you can be faced with a claim and at least have to pay for your defence. This cover will protect your business for compensation and defence costs should a client think you have given bad advice, provided work late, or services that are not up to scratch.