Making sure you’ve got the right sort of insurance for your business is essential; trading without it could not only prove costly but also land you in hot water legally.
There are lots of business insurance policies available, and most can be fully customised to meet the needs of your business, without costing the earth.
Before you can start shopping around for quotes you need to decide what protection you need your business insurance to offer. This will largely depend on the type of company you run, the number of employees and the type of work you do.
Here is a breakdown of the main types of business insurance available and an overview of the cover each option provides so you can find a policy that suits:
Employee liability insurance
If you employ staff in England, Scotland or Wales then employee liability insurance is a legal requirement for your business.
Employee liability insurance will pay out to cover your legal fees and potential compensation payments should a member of staff be injured or killed at work.
Legally the minimum amount of cover you need is set at £5 million – if you fail to have suitable employee liability insurance you can be fined up to £2500 a day by The Health and Safety Executive.
Public liability insurance
Public liability insurance will cover the cost to your business in the event you are legally liable to pay damages or compensation to a member of the public.
This type of insurance will usually pay out to cover costs associated with injury or death of a member of the public as well as damage to public property caused by your business.
If you have members of the public present at your place of business, such as a shop or show room, then it’s likely you will need to include public liability cover.
This type of cover also extends to your employees working off site, extending the scope of your employee liability insurance.
However, if your business isn’t open to the public, i.e. a factory or private office you may not need it.
Product liability insurance
Like employee and public liability insurance, product liability insurance will cover you in the event of injury or death caused by a product made by your company.
If you decide that your business may need this type of cover you should check if your policy will cover claims outside the UK or EU, especially if you export your products overseas.
Product liability insurance will not, however, pay out to cover refunds and claims by customers for poor quality or faulty products.
When deciding if you need this type of cover you should consider if you make any physical goods that are used by the public and if there is any conceivable way they could cause harm.
Professional indemnity insurance
Professional indemnity insurance covers your business in case you, or one of your employees, makes a mistake and your business is sued for damages as a result.
This can cover a wide range of areas including accidental copyright infringement, loss of client documentation or staff negligence in a duty of care.
Certain professions must legally have this type of insurance before they can practice – usually as a result of financial authorisation requirements – these include: financial advisers, insurance brokers, accountants, architects, surveyors and solicitors.
Business interruption insurance
If you are forced to cease trading due to unforeseen circumstances, business interruption insurance will cover any loses you incur for a fixed period of time.
Most policies will pay out if your business is unable to operate for a variety of reasons including IT failure, a death or injury in the business or local government action i.e. roadwork, theft and vandalism.
However, business interruption insurance will not cover illness, a lack of work or failure to meet projected profits. Policies will also place a limit on the maximum claim and number of weeks or months they will pay out, so make sure you check this meets your needs.
Commercial property insurance
Like personal home insurance, commercial property insurance covers physical property belonging to your business.
A standard business contents insurance policy will cover belongings held on site at your main place of work but is unlikely to extend to business vehicles, where goods in transit or commercial van or car insurance would be needed.
If you own your premises then you will need business buildings insurance to protect the bricks and mortar.
Although each policy will vary, they will typically cover your property in the event of natural disasters such as flood and fire, as well as theft and acts of vandalism.
Note: Standard contents insurance that you buy for your home will not cover your business unless explicitly stated – even if you work from home.
Goods in transit insurance
Transporting high value or a large number of goods can be risky for your business, and although sometimes covered by car/van insurance, goods in transit insurance is specifically designed to cover the loss, damage or theft of business property while it's being moved from one place to another
This type of insurance will often include goods being transported by a third party courier, meaning they are insured through delivery.
Legal expenses insurance
Legal expenses insurance provides cover should an employee or former employee sue your business regarding an aspect of employment law, such as constructive dismissal.
It can also extend to cover legal fees in the event of being taken to court by public bodies like a health and safety executive or HMRC regarding tax desputes.
If you are concerned about the possible legal costs in the event of a claim by one of your employees or a public body then legal expenses insurance may be worth considering.
Business insurance packages
All of the above insurance policies are available individually or as part of combination policies which are designed to meet the insurance needs of common business types.
Depending on your insurance needs, you can either opt to take out a package policy or customise your own insurance cover by looking at separate policies.
Home business insurance
Many insurance providers now offer home business insurance specifically tailored to those who work out of their own home.
This type of policy usually includes business contents insurance to cover your business property in your home but may not extend to buildings cover as you would be working out of your private home.
This type of cover often includes goods in transit cover, for home business that post out goods to clients and customers.
Self employed business insurance
If you are self employed and your business is your main source of income, you may also need to consider taking out certain business insurance policies.
Ready packaged policies are not as readily available for self-employed businesses as they scope and type of work they involve can vary dramatically. However, most insurers will help you to build bespoke packages tailored to the unique needs of your business.
For example if you make products to sell you will need to consider goods in transit cover and product liability insurance, while if you run a service business you may need public liability cover.
Targeted at shop owners, shop insurance will usually include public liability insurance as a standard, to cover you against injury to members of the public while in your shop.
This type of cover will also often include product liability insurance and goods in transit cover, as shops can be held liable if the goods they sell cause injury to their customers and often have to transport products of a high business value.
If you own a retail business and run a shop on site this is likely to be a suitable insurance package for your business.
Specifically designed for tradesmen, this type of policy will usually cover insurance policies for mobile workers including legal expenses cover and product liability insurance.
Tradesman cover does not generally include commercial property insurance cover as it is assumed most tradesmen will not operate from a fixed site.
Office Insurance is designed to meet the insurance needs of office-based businesses.
If you are renting an office, rather than owning your own site, you can get contents insurance without a buildings policy to just cover property and equipment on site.
As with the other insurance packages listed, the different types of cover provided by an office insurance policy will depend on the provider so before you take out a policy ensure everything your company needs is included.
Choosing the best cover
When deciding what type of cover your business needs you should look at the day to day activities of you and your employees, your legal insurance requirements and potential risk areas.
You can use our business insurance tables to easily compare the different policies on offer by the major insurance companies.