When you buy a new car or move into a new house, it’s important to think about insurance – it’s no different when you start a business. Insuring your business can protect you from losses down the line. But what types of business insurance do what, and which ones do you need?
We’ve put together a guide to the different types of cover you might want to consider, so you can give your new business the best protection you can – without paying for things you don’t need.
Public liability insurance
One of the main types of business insurance, public liability insurance is worth thinking about if you interact with members of the public. It can pay out if someone suffers an injury because of your business, or if their property is damaged.
These days we’re all a lot more health and safety conscious, so you probably know that trailing cables can cause injuries, but even when you take all the precautions you can, accidents do sometimes happen.
Whether you’re a gardener who accidentally cuts through a power cord, a consultant who knocks over a vase while visiting a client, or a market trader who spills hot coffee on a customer, there are lots of ways that little mistakes can lead to big claims.
Public liability insurance isn’t a legal requirement, but you may find that clients or landlords require you to take it out before you can start work.
Professional indemnity insurance
Professional indemnity insurance also covers you against mistakes, but this is to do with your clients making a financial loss, or suffering reputational damage because of work you’ve done – or advice you’ve given.
This can be as simple as CCing the wrong James in an email and accidentally breaching confidentiality, or it could be that you mistyped a number and your client prints thousands of flyers with incorrect information.
Much like public liability insurance, professional indemnity insurance isn’t usually a legal requirement, but there are some membership bodies that require you to take it out before you can join – such as The Law Society and the Institute of Chartered Accountants.
In a few cases, you need to have professional indemnity insurance in place before you can practice your profession. Osteopaths, for example, are required to have it before they can legally practice in the UK, so it’s worth checking whether you fall into one of those categories.
Employers’ liability insurance
Employers’ liability insurance is the one type of cover that is a legal requirement, if you employ staff.
If one of your employees is injured or becomes sick while working for you, employers’ liability insurance can cover the cost of medical fees and compensation claims. While you might think of ‘injury’ as falling from scaffolding, it can be as simple as someone developing musculoskeletal problems from sitting in a chair they’ve not been trained to set up properly.
It’ll also cover you if one of your employees is responsible for injury or damage to a client, customer or third party – much like public liability insurance.
Not having employers’ liability insurance in place can land you with a fine of £2,500 for each day you’re not covered – and that’s per employee. In some cases, employers’ liability isn’t a legal requirement, such as if you’re employing immediate family members, but you’ll still be liable for medical fees and compensation claims – just not the fine.
Other types of cover
Public liability, professional indemnity, and employers’ liability are the main types of insurance, and they will usually form the basis for any insurance policy you take out.
However, you may want to cover other aspects of your business, depending on exactly what you do. Here are some additional types of insurance you may want to add on to your policy:
- Business equipment insurance – this covers your business equipment (such as your laptop) against loss, theft, and accidental damage
- Business buildings’ insurance – whether you have business premises or you work from home, this cover can pay out if your building is damaged or destroyed, covering the cost of repairs and rebuilding
- Stock insurance – another one that does what it says on the tin – if you have stock, this can cover it against loss, theft, and accidental damage
- Product liability insurance – if you make, manufacture, or sell products, you could be on the hook if someone is injured or their property damaged by one of those products. This type of insurance can pay out for medical bills, repair costs, and compensation claims
- Personal accident insurance – if an injury leaves you unable to work, personal accident insurance can cover loss of income as well as medical fees.
And there are plenty of other covers, too, that you may want to consider. Using a site like Simply Business, you can compare different covers from a range of leading insurers and create a policy that suits your needs.
Watch the details
Whenever you take out business insurance, make sure you read the policy wording carefully so you know exactly what you’re covered for – not all policies are created equal. They may have different cover levels, or different excesses, and it’s worth being aware of those in advance so you don’t have a nasty surprise if you need to make a claim.
There are a lot of things to think about when taking out business insurance, so make sure to do your research and ensure your policy ticks all the boxes you need it to.