For the majority of small businesses, public liability insurance is the most important type of cover. It protects a business by covering the cost of a claim if an accident happens with a member of the public, resulting in injury or damage to them or their property.
Claims for public liability can run into tens of thousands of pounds, depending on the type of work you do and the extent of the accident. In one example, a plumber who failed to properly fit pipe caps on his installation caused a flood, damaging several units in a shopping centre, resulting in £22,500 worth of damage.
Self-employed professionals who give advice or provide services to businesses or individuals should consider taking out professional indemnity insurance.
Professional indemnity insurance offers cover for certain situations when you may have been negligent in the advice given to a client, or where there have been serious mistakes in your work, and as a result, you have been faced with compensation claim.
For example, if an architect submitted faulty plans for a building, which were only discovered when the project was well under way, he or she would be liable for the cost of any alterations and delays suffered by the client. Professional Indemnity would pay for these costs, plus any legal expenses incurred.
If your business employs staff, even on a part-time or temporary basis, you must by law have employers’ liability insurance. You are legally obliged to have a minimum of £5 million cover.
If an employee is injured or becomes ill in the course of their work, and it can be proven to be the fault of your business, you could face a claim for compensation. An employers’ liability policy will ensure that your business is protected from this cost.
Tailored business cover
In addition to these covers, there are others that can be equally important, depending on what your business does.
For example, shops, tradesmen and small businesses may want to include business interruption insurance under their policy. This cover compensates your business for lost income when it is forced to suspend work due to an event that is stated in your policy. It could be for an incident such as a fire on your premises, or even due to police temporarily closing your business for a crime investigation, such as a burglary.
If your business holds any stock or cash on its premises, insurance can be taken out specifically to protect it from theft, damage or destruction.
Similarly, insurance is available to cover your tools if you are a tradesman. This can be a vital cover as good-quality tools used by professionals are often very expensive and can take time to replace.
As well as general theft from outside parties, you can also protect your cash, tools and stock against theft by employees.
When thinking about taking out or switching your insurance, it pays to visit a comparison website. Such sites allow businesses of any size to easily compare prices from a variety of insurers, and check actual policy working to ensure the correct cover is selected.
There seems like a lot of choice when it comes to cover, but most insurers will include all of them under one policy. This not only makes it easier when the time comes to renew, but it can cut down the cost of your insurance too.
Further reading: Business insurance: 10 common questions answered