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Queries and concerns about business insurance are stopping UK SMEs getting the cover they need. These FAQs should help you understand how best to protect your company.
In an ideal world, growing your business goes smoothly with no unexpected hiccups. Of course, challenges regularly crop up. From so-called ‘acts of God’ such as floods and fires, to deliberate acts of vandalism and theft (both the physical and cyber variety); from disputes with employees and business partners, and a whole range of accidents, your business is at risk every day. Business insurance is the only really effective protection for unpredictable risks.
The type of business insurance cover you would find useful depends on several factors, including the size of your business, the number of employees and the business activities you engage in. A solicitor working from home on her laptop will have very different risks from a mobile hairdresser, for example, or a small manufacturing company.
There are two covers which are relevant to almost every business, regardless of size or type. These are:
Another extremely common cover is professional indemnity insurance.
Other covers will very much depend on your business activities. For example, a pub should be insured against loss of license. And any business holding customer data, such as a car dealership, will be very strongly advised to take out cyber liability insurance. If you think you are do not hold such data (or are a ‘data controller’ to use the proper terminology), you may be surprised at how many are affected (see our guide to find out more).
Any business dealing with the general public is strongly advised to be fully covered for public liability. You could be a retailer or dental surgery that receives a string of customers or patients every day, or a freelance architect who invites the odd client to his home-office. In all cases, if a member of the public has an accident on your premises, you could be held responsible and sued for damages.
Employers’ liability is similar to public liability insurance, with the difference that the individual seeking damages would be a person in your employment. Be careful with the definition of ‘employee’. With rare exceptions, anyone who contributes to your business activities – whether they’re a full-time member of staff, an unpaid volunteer, or a freelancer – is considered to be an employee. As such, you can be held financially responsible for any accident or injury they suffer while at work.
It’s important to note that employers’ liability insurance is a legal requirement for almost all businesses.
Any business that offers advice to a third party should seriously consider taking out professional indemnity insurance. This type of policy covers you against ‘bad’ advice, and could save you the expense of crippling legal costs. While not a legal requirement, professional indemnity cover could, thus, be a very good idea for many businesses.
Imagine a construction firm that overlooks a planning law and advises a property developer to build on a site that turns out to be illegal. Or a beauty therapist who recommends a product that causes a serious allergy. A professional indemnity claim could potentially wipe out these businesses.
Combined business insurance is available from some providers but the complexity of covers and the unique requirements of each company mean that off-the-shelf products can have gaps in cover.
The risks of homeworking are often overlooked but are an important consideration for those running a business from home, as well as companies offering employees the option of home-working. In short, the answer is: probably not. It’s essential to be covered for your business activities in their own right, even if the property is already insured as your home. To find out how this applies to you, call one of our advisers now on 0800 411 8830 or fill in the form at the top right of the page.
Working with contractors can be a good option for a small or medium-sized business. It gives you the manpower when and where you need it, with more flexibility and fewer long-term obligations. But this can lead to complex legal disputes. Our five key considerations that may decide an employee’s status offers some information but the best option may be for both parties to be fully covered.
This will very much depend on the size of your company and its business activities. Combined insurance packages can be very competitively priced (although, as noted above, making decisions based on price alone may leave you vulnerable). In any case, whatever you invest in your premium will be minimal compared to the compensation you’ll receive if you have to make a claim.
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