If you’re going into business, you need to protect yourself from any risks to your business and ultimately; any risks to your income. As your business grows, so do the risks to it, for example;
- When you start employing staff, you need to make sure that they are safe and that you can pay their salary
- When customers enter your business premises, even if that is at your home, and similarly if you enter your customer’s home / premises; you need to be protected against any injuries or damages by taking out Public Liability Insurance.
- When you move into your own premises or when you start buying expensive equipment, you will need to insure it against damage of theft.
- If you’re ill and it results in your business not being able to operate, you need to be able to claim on loss of earnings insurance.
You should start by looking at Public Liability; this is the most commonly purchased insurance by small businesses and often protects you for values up to £1,000,000. You might expect the premiums to be high for this type of insurance but because the market is so large, prices have been pushed down, and the premiums get even lower when other types of insurance are taken out with the same insurer.
When the public visit your premises, there is a chance that they may injured by you or your business operations which would usually enable them to take legal action against you. As a small business, you may not be able to cover claims amounting to thousands of pounds, which is why you should take out Public Liability Insurance to cover any such claims.
Similarly, Public Liability Insurance will cover you for any damage to third party property caused when you’re on business, for example; if Bob from the fictional ‘Bob Smith Domestic Electrical Analysis Services UK Limited’ went to a customer’s house to test their electrical circuit and accidentally knocked a cup of tea onto the fuse box, the customer may choose to take legal action against Bob for causing so much damage and leaving them without electricity for a week.
Bob’s business is still relatively new and does not have enough spare cash to cover the £8,000 being demanded from the customer’s lawyers but luckily Bob read Starting-Business and took out Public Liability Insurance which will cover all the costs, meaning that Bob can carry on doing the job that he loves whilst being a bit more cautious with his tea.
If you employ staff, you are legally obliged to take out employers’ liability which covers you if an employee is injured or falls ill at work. This insurance covers your employees both on and off site but does not cover the public, for this, you would need to take out Public Liability Insurance.
A very small amount of businesses are exempt from this obligation, they are;
- If you own at least 50% of the share capital in your business, and you are the only employee
- If you are a Sole Trader and do not employ anybody, with the exception of close family
If you just employ staff on temporary, casual or seasonal contracts, you also must have Employer’s Liability insurance for the same reasons as above.
The cost of compensation will be covered by this insurance, meaning that a claim should not have a detrimental effect upon your business.
Professional Indemnity Insurance covers you if somebody tries to claim against you because they are at a loss, as a result of your service or advice; this is particularly useful for consultants and designers. This insurance should be taken alongside Public Liability Insurance to give you peace of mind.
Office insurance covers your premises and equipment against risks such as fire, theft, flood & accidental damage.
E-risks insurance will cover you against threats to your business from online sources, such as viruses and hackers.