The issue of liability insurance depends largely on the relationship between you and your trainees.
“If [you are] employing them – as opposed to them being co-owners of the business – [you are] almost certainly going to require employers’ liability insurance and will certainly require public liability insurance too,” advises Steve Cudworth, of specialist insurance broker Barclay Brown.
“The employers’ liability regulations state that businesses, with few exceptions, must insure against their liability for personal injury to their employees with a minimum cover of £5 million,” elaborates AXA Insurance‘s Mike Butler. “Failure to display a certificate [of confirmation] can result in a maximum fine of £1,000. Businesses can also be fined up to £2,500 per day for trading without this insurance protection.”
If those you are training are employees, employers’ liability is the only form of insurance that is legally compulsory. Yet, as Barclay Brown’s Cudworth notes, it is advisable to find out which other forms of liability insurance are in your best interest. Property, capital and key-person insurance may all be worthwhile from a business point of view. If you are offering a professional service then public liability insurance and professional indemnity may also be a must.
Unsurprisingly, Cudworth suggests that the best way of discovering exactly which policies you require is to seek out a well-connected insurance broker. A specialist broker should be able to advise you on your individual needs and provide a range of quotes, affording you a chance to select the best deal.
David Bishop of the Federation of Small Businesses agrees. He says he would “stop short of saying that brokers always provide the best deal”, but reckons turning to a specialist can help you secure the best quote.
As you may be aware, employers’ liability insurance is currently a hot issue. In most cases you are legally obliged to have it, yet premiums have been surging, policies have lapsed without warning and many small firms have been unable to secure cover at any costs.
The Government is now investigating the situation, but AXA’s Butler recommends that in the meantime business-owners focus on risk management to secure affordable premiums. “Insurers are looking more and more to differentiate between companies that do embrace risk management and those that do not,” he opines. “Risk management is therefore a vital discipline that can assist in managing premium costs in the longer term.”
FSB spokesman Bishop argues a similar point. He believes firms with strong health and safety records – i.e. those who are low risk – will receive cheaper quotes and urges firms to provide evidence of this when looking for insurance.
Bishop also recommends that small businesses make a note of when their policies are due for renewal. Presently, insurers aren’t legally obliged to send a renewal invite out to their customers and this allows them to lapse policies or ratchet up premiums at the end of the period. By contacting your insurer four weeks before renewal, you will have time to assess the premium on offer and seek out rival quotes.