Business insurance is essential if you run your own company, and you could be breaking the law without it. Here is how business insurance works.
It can pay out if you suffer a financial loss while carrying out your business activities, including cover for:
Tools and machinery
It reduces uncertainty, because your business can still operate if something goes wrong.
You can get basic policies designed for self-employed tradesmen or professionals; or more comprehensive cover for larger companies and franchises.
Think about what your business needs and try to find a package policy that can cover everything. You can find a policy by:
Going direct to an insurer
Discussing your needs with a broker
The different types of insurance that protect your liability as a business include:
Public and product liability: This pays out if a third party or their property is injured or damaged because of your business activities.
Employers' liability: This pays out if you have to compensate your employees, if they are injured or if they die as a result of working for you.
Professional indemnity: This pays out if a client sues you for damages that result from your professional advice (e.g. if you are a solicitor or an accountant).
Legal expenses: This covers legal fees for court proceedings like employment tribunals, or tax disputes with HMRC.
The types of insurance that protect your commercial premises and its contents include:
Commercial property cover: This covers damage to your building, contents and any stock your business owns.
Business interruption: This covers any financial losses you suffer as a result of not being able to trade, due to property damage. For example, if your shop is flooded.
Goods in transit: This covers loss, damage or theft of your business property while it is being moved from one place to another (e.g. office contents or stock).
You can get package policies that let you combine different types of business insurance, and you can cover more than one business on a policy.
By law, you have to have certain types of business insurance. For example, if you employ paid or voluntary staff you need to have employers' liability insurance.
There are also some professions where it is compulsory for you to have professional indemnity insurance, like financial advisers and insurance brokers.
Other types of business insurance are optional, but you should look into property cover if you have a mortgage or long term lease on a commercial premises.
The price you pay for business insurance depends on:
The type of business you run
Your annual turnover
How many employees you have
The size of your premises
The level of cover you need
Once you have decided what cover your business needs, shop around and compare quotes to find the most competitive policy.
If you need to claim on your business insurance, contact your insurer immediately and give them as much detail as possible.
Most business insurers run a 24 hour claims helpline, but they may want to visit you before they settle your claim, to discuss things in more detail.