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Business Insurance Guide

As a business owner it is often difficult to know what insurance you need.

The types of insurance policy you buy can differ depending on the size and type of business you are running, your insurance budget and whether any of your customers have requirements about what insurance cover you should have.

To help you understand what's on offer we have summarised a few key areas of cover:

  • icon-public-liabilityPublic Liability Insurance
    Public Liability Insurance protects you against claims for compensation from anyone outside your business who have suffered an injury or whose property has been damaged. This could be something as simple as a visitor to your business tripping, resulting in damaged knee ligaments and a claim for compensation. It also covers more serious claims resulting from accidents which cause serious damage to a building or injuries to a member of the public. Public liability cover will pay for the compensation and legal costs arising from accidents like this. If you come into contact with members of the public you should consider getting public liability insurance.
  • icon-work-safetyEmployers' liability insurance
    If you have employees, whether part-time or on a temporary basis, you must have employers' liability insurance, it is a legal requirement. This cover protects you if an employee is injured or becomes ill because of their work. They may seek compensation from you and, depending on the severity of the injury or illness, payments can be extremely large. Employers' liability cover will pay for compensation as well as the legal costs of defending the claim.
    Business Equipment and Stock Insurance
    Most businesses would find it difficult to work with no access to their place of work – whether you're a consultancy business and rely on your IT equipment or a plumber who couldn't work without their tools.

    You have to consider if you can afford to replace all of your business equipment or stock in the event of it being destroyed, lost or stolen out of your own pocket? If the answer is no you should consider insurance to protect your assets.
    When buying this cover, it is important to ensure that the sum insured on your contents and business equipment list is equal to or greater than the value of your equipment; not just the items you think are important don't forget to include the office chairs and filing cabinets. If you under-insure it's unlikely that you would get the full value of any items you claim for.
    This will also apply to your own or hired-in plant if you work in the construction industry.
  • Property Insurance
    If you own the building you work from you need to make sure that it is properly protected. You need to be confident you won't suffer financially in the event of a flood, fire or other event which damages your property.
    Another cover to consider is business interruption insurance. This will help provide for the money you lose if you can't work because your property has been destroyed, stolen or damaged.
    Professional indemnity
    Professionals are selling their knowledge and expertise to their customers in a number of different ways including providing advisory and consultancy services and producing designs.
    If your client loses money because of a mistake you've made, you could be faced with a claim for compensation. You might feel you have done nothing wrong but still be faced with significant legal costs to defend the claim.
    Professional indemnity insurance can protect your business by paying for this compensation and legal costs.
  • What else do I need to know about business insurance?
    You may feel confident you know what insurance to buy but not exactly how much. You should be mindful as to whether any of your contracts state how much business insurance cover you should have. Often they will require you to have a minimum level of public liability or professional indemnity insurance. If this is the case then it should be your starting point although you may decide that you need more cover than what the contract asks for.

    For public liability and professional indemnity you will need to choose a limit of cover which is correct for your business. Think about the type of work you do and what could go wrong in a worst case scenario – how much might it cost, especially if a dispute went to court. Buy a level of cover which you are confident will cover the cost of compensation you might have to pay.
    Employer's liability insurance is a requirement of law if you have employees and you must purchase a minimum of £5 million in cover – although many policies will automatically cover you for £10 million.
    When buying property insurance the most important thing is to make sure you are not under-insured. Be sure to calculate the rebuilding cost including any fees of all the entirety of your property.
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