Business insurance is a key element of any business plan, and may save you a lot of money in the long-run. So, to discover more about it and to why to get it, read on.
Getting business insurance can often seem like a huge hassle. There are so many different types of insurance out there, and if you own a small business, adding the price of this to your overhead may not initially seem worth it. What’s more, many people are pessimistic about obtaining insurance, assuming that insurers will be reluctant to pay out.
Anyone who’s had a dispute with your insurer will tell you it isn’t always guaranteed. Even so, the reality is that having insurance for your business is absolutely necessary and, most of the time, the insurer will pay out.
To make the whole process seem less daunting, we’ll be taking you through all the details in today’s blog post. We’ll be outlining various types of business insurance, so you have an idea of what you’ll need. Then, we’ll be sharing eight reasons why this is the next step for your company, so stay tuned if you want to learn more.
Types of Business Insurance
Before we go any further, we need to first let you in on the types of insurance you should look into getting for your business. With this in mind, the five main ones you can look into getting for your business are…
- Business buildings insurance: this protects your business premises, such as a shop, office, or pub.
- Business content insurance: this protects the contents on those premises, such as equipment or tools.
- Stock insurance: this covers both stock on your premises and any stock you have in storage.
- Product liability insurance: this is only for specific cases, where customers suffer damage as a result of a faulty product you’ve sold to them. You can be held liable for the damage even if you didn’t manufacture the product.
- Business interruption insurance: this covers you against natural disasters, such as floods and fires. It will cover you for the loss of revenue, but if any stock is destroyed, that is covered by stock or content insurance.
This is not an extensive list, and there are many more types you might need but, ultimately, not everyone needs every type of insurance for their business. For example, if you don’t hold stock or sell products, then there’s definitely some money to be saved here. It’s all down to your own discretion.
What Business Insurance Do I Need?
There’s no such thing as cheap business insurance; the cheaper you get it, the riskier it’ll be, and there may be no point in the end. That said, as we’ve mentioned, you can lower the amount you pay by only getting the insurance you need for your particular line of work. Your main priorities, when thinking about your insurance, should be:
If your business employs staff, as most do, you need to have employers’ liability cover by law. So, that’s one to add to your list right away if you want to meet the minimum legal requirement for your business. It protects you if staff suffer an injury or illness on the job.
If you’re in frequent contact with members of the public, on your premises or elsewhere, you should also get public liability insurance. This type of insurance protects you against compensation claims made by clients, customers, suppliers and other third-parties. It’s typically used by hairdressers, restaurants, builders and tradesmen.
Professional indemnity insurance is for businesses that offer professional advice, and can pay for compensation claims and legal costs if you are sued by a client. Some professional bodies and regulators require their members to have this type of business insurance. So, if you’re a surveyor, architect or accountant, it’s likely you’ll need to have it.
Finally, personal accident insurance covers serious injury and death, with a maximum £10,000 paid for an injury and £20,000 for a death. Protecting you, your staff, and your customers is the ultimate goal with all of these types.
It’s not only your staff, your clients, and members of the public who you need business insurance for, there’s also the issue of your property, stock and products. These are a little more optional than the insurance that protects human life, and your chances of being sued. However, if you think you might lose a lot of money if anything is stolen, lost, broken, or else, this should be another of your main concerns.
8 Reasons to Get Business Insurance
Now that we’ve got the technical definitions out of the way, and you’re thinking about which types of insurance you’re willing to pay for, I’ll do my part to explain why it’s a good idea to err on the side of caution…
It’s the Law
As we mentioned in the last section, employers’ liability cover is required by law. If you fail to obtain this insurance, the Health and Safety Executive (HSE) can fine you £2,500 for every day that you don’t have it.
You also have to print out your certificate and hang it somewhere employees can see it, as well send it to the HSE if requested, or you face a potential £1000 fine. They definitely don’t mess around when it comes to this stuff, so it’s best to stay on their good side.
You Could Get Sued
Being sued by an employee, a customer or a client could end your business on the spot. The cost in legal fees alone, never mind paying out damages for the suit, is enough to hit any company hard. It’s much better to take out any business insurance you might potentially need beforehand, to avoid taking a critical hit to your finances.
Makes You Look More Credible
Having any insurance for your business makes you more credible to clients and customers, because they know that you’re a safe bet. If anything goes wrong with the work you do for them, they know you are able to compensate them for it. They also know that, if worse comes to worst, for example if you’re sued by an employee or all your stock is destroyed in a disaster, your company won’t go under, and they can continue to do business with you.
Protects Your Employees
Protecting your business isn’t the only reason to insure your company; you want to make sure you take care of the people who work for you too. These are likely people you care about, and you want to make sure that if something does go wrong, they have the money to pay their rent, and look after their families.
Attracts Potential Employees
If you’re in a situation where you’re after an employee with specific skills, and they have offers from other companies, letting them know they’re full covered under your insurance plan could tip the scales in your favour. Business insurance can also help you retain the employees you have, as they know that the company actually cares about them, and wouldn’t leave them high and dry if anything happened.
Protects You Against Bad Actors
If you have a business that deals with a lot of clients, and those clients expect to see a result from the work you do, they can sue you if they believe you haven’t performed the service as well as they expected you to. This leaves you open to lawsuits from bad actors who can find reasons to blame you for their loss of revenue.
You might think that, as long as you don’t make a mistake, this will never happen. But people make mistakes all the time, and it doesn’t even have to be your mistake. All it takes is for one of your employees to slip up and you could be faced with a lawsuit to pay your client all the money they believe you lost for them. So, if you take out professional indemnity insurance, it covers the compensation claim and legal costs of a lawsuit.
Protects You Against Natural Disasters
We all know the old trope of a savvy insurance salesman trying to sell you volcano insurance. But, natural disasters do happen, and there’s not much you can do to stop them.
Business interruption insurance is probably the one you’re least likely to buy, especially in the UK, as though there are so few natural disasters. However, it’s not only worth getting this insurance if you’re in a high flood area, because this also covers fire damage, and that can occur in any business at any time.
Peace of Mind
This reason is as simple as it sounds; get business insurance to give you peace of mind. It’s a clichéd phrase used in every insurance advert you’ve ever seen, but that’s because it’s true.
Sure, you might not think about your life insurance every day whilst you’re going about your life, but insurance for your business is different. Your business is your livelihood – it’s where you go to work every day – and you don’t want to find yourself worrying about every slip, trip, injury, illness, potential fire risk, stock damage, and lawsuit that could happen any time and destroy everything you’ve worked so hard to build.
At the risk of playing on your paranoia, isn’t it just better to pay it and take a load off your mind?
Haven’t Got Your Business Insurance Yet?
So, those were our eight reasons you need business insurance. There are loads more we could’ve talked about, but I think we’ve given you enough to think on for now.
Above all, our advice would be to err on the side of caution. If you think you might need one of the insurance policies above, then just get them; it will save you a lot of hassle in the long run.
Have you got any further advice for getting insurance, or perhaps you have some horror stories to share, of when you didn’t get it sorted ASAP? Let us know in the comments below, so no one makes the same mistakes.