Indeed, you might already know this, but feel bewildered by much of the jargon associated with corporate insurance. How are you supposed to know which types of business insurance you need and which types would be effectively wasting your money? Here is a detailed guide.
1. Why do I need to insure my business?
Quite simply, in some circumstances, operating without business insurance is illegal, as warned on Start Up Donut’s site. However, there might be other forms of corporate insurance that your business would be ill-advised to avoid.
Without such insurance, a claim arising from an accident – either at the premises or otherwise due to your company – could necessitate a payout that bankrupts your business.
2. What types of business insurance are legally compulsory?
If your company has staff, it is legally required to hold employers’ liability insurance. It is crucial that you have a policy in this kind of insurance at the point of recruiting anyone, paid or unpaid. This insurance would even be necessary if you have just staff members on work experience placements. If your firm operates vehicles, it would also need motor insurance of at least third-party level.
3. Are there any other kinds of business insurance I would need?
There might be some forms of business insurance that the law does not strictly require you to have, but could appear necessary in practice.
For example, if you offer professional services, potential clients might insist on you having up-to-date professional indemnity insurance, The Telegraph warns. In this situation, not having such insurance could lead those clients to decide not to work with you.
4. What is public liability insurance?
If you or an employee of your company damages third-party property or injures a non-staff member, public liability insurance can enable you to cover the cost of a compensation payout.
Consider the example of a visitor tripping over at your premises and incurring serious injury. Public liability insurance is intended to help you fund compensation for members of the public rather than your staff.
5. What is professional indemnity insurance?
We have previously mentioned it – and, indeed, professional indemnity insurance is meant for businesses that provide professional services or give advice.
If you make a blunder or give poor advice resulting in a client losing money, that client – or an associated third party – could bring a successful lawsuit against you. Losing this lawsuit would require compensation which professional indemnity insurance could help you pay for.
6. How should I insure the business premises?
Given how much your business could rely on its premises, it would be wise for you to insure the premises. This would include insuring buildings, fixtures, fittings, machinery, equipment or tools.
If you deem your firm at risk of theft, fire or flooding, getting cover for these risks would also be wise. This insurance can be sourced cost-effectively when packaged with other business insurances.
7. What is business interruption insurance?
There might be occasions when you are temporarily unable to use your premises. For example, flooding could damage a corporate base beyond practical use.
Even if the business is actually on a high floor unaffected by water damage, you might remain unable to reach it for weeks. In that situation, business interruption insurance could financially enable you to set up a new office for temporary use and hire equipment for it.
8. How should I start looking for business insurance?
While asking other business owners for recommendations could help, you might struggle to find an insurance policy that meets all of your practical needs while remaining appealingly priced.
That task can, however, be easier when you ask an insurance broker to compare various policies and present the one it deems best for you.
9. How can I find a good business insurance broker?
A worthwhile insurance broker can meet various criteria. For example, it’s a good sign if you will be dealing with a person responsible for looking after the policy rather than simply closing the sale, as this will better incentivise them to ensure you get the most appropriate insurance policy.
It’s also a good idea to check that the broker is regulated by the Financial Conduct Authority. Be Wiser Business Insurance, based in Hampshire, is one example of an FCA-regulated broker.
10. What else should I know about insuring my business?
Don’t rush your research when looking for suitable insurance. The world of business insurance can be stuffed with jargon, but we hope that we have cleared much of the confusion surrounding it. Also, consider that insurance policies can differ in their boundaries and conditions. However, expect a good broker to discuss the options with you and address any remaining questions you might have.