By Bethan Harper on Small Business UK – Advice and Ideas for UK Small Businesses and SMEs

For some, the importance of business insurance is overlooked because they’re unaware of the extent of protection it provides. For others, the complicated jargon and numerous options leave them too overwhelmed to make a decision.

Whichever one of these camps you fall into, putting your reservations to the side and learning more about business insurance is the best way to safeguard your company.

Some business insurance is compulsory. For the non-compulsory insurance, it depends on the sector your business operates and the risks that come with it. You should also consider insurance based on the typical size of the claims, which could seriously harm your business’s future operations if the worst was to come to the worst.
Here are some answers to the most common questions.

#1 – Why do I need to insure my business?

Quite simply, in some circumstances, operating without business insurance is illegal. But you shouldn’t buy insurance just because it’s a legal requirement, there are other forms of corporate insurance that your business could really benefit from.

Without purchasing additional insurance to protect your business, a claim arising from an accident – either at the premises or otherwise due to your company – could leave you with a large compensation claim.

Find insurance for your small business now

#2 – What types of business insurance are legally compulsory?

If your company has staff, it is legally required to hold employers’ liability insurance. This is the case if you have any employees other than yourself, even if they’re unpaid volunteers or student interns.

Employers’ liability insurance covers any compensation costs in the instance that one of your employees becomes ill or is injured as a direct result of their work. For example, if one of your employees falls on your business premises due to uneven or broken flooring and breaks a bone, you’ll be covered financially.

If your business operates any motor vehicles, you’ll also need at least third-party motor insurance.

Employers’ liability insurance – don’t get caught out – Whatever the line of work, all small businesses will carry an element of risk which could affect its staff

#3 – Are there any other kinds of business insurance I would need?

Not all business insurance policies are legal requirements, but that’s not to say they’re not necessary to safeguard your company.

Spending money on protecting your business against events that might never happen can sometimes feel frustrating and potentially unnecessary, but if the worst should happen, it could be the difference between sinking or swimming.

Some policies you might want to consider purchasing include:

Public liability insurance: Cover for injury and damage claims made against your business by a third party

Professional indemnity insurance: Cover against claims for loss or damage made by third parties as a result of negligent services/advice provided by your company

Business interruption insurance: Cover for loss of income during periods your business cannot operate due to an unexpected event

Property damage insurance: Cover for the cost of repairing any accidental damage to the structure of your property

Warehouse insurance: Cover for the cost of replacing stock or equipment stored in your warehouse in the instance it is accidentally damaged

#4 – What is public liability insurance?

If you or an employee of your company damages third-party property or injures a non-staff member, public liability insurance helps you cover the cost of a compensation payout. For example, if a visitor trips over while on your business premises and incurs a serious injury, they might file a claim against you. Public liability insurance is intended to help you fund compensation for members of the public rather than your staff. If you have a good amount of business savings, you might be wondering why public liability insurance is so necessary, and that’s probably because you’re underestimating the cost of a compensation claim. Even mild injuries could see you asked to pay upwards of £10,000, with some more severe injuries invoking payouts of £50,000+. And, for most small business owners, this isn’t the kind of cash you just have lying around.

Small Business Pro has a 24/7 legal and tax line that you can call if you need dedicated expert support. It will also help with the heavy lifting of managing customers, taking payments, insurance, finance and HR, plus you’ll get a host of personal wellbeing benefits.

You can find out more about Small Business Pro here.

#5 – What is professional indemnity insurance?

Professional indemnity insurance is intended for businesses that provide professional services or give advice.

If you make a blunder or give poor advice, resulting in a client losing money, that client – or an associated third party – could bring a successful lawsuit against you. Losing this lawsuit would require compensation which professional indemnity insurance could help you pay for.

An example of a business that could benefit from professional indemnity insurance is an architectural company that draws up building plans. If a building is built based on a flawed architectural design and needs to be torn down or drastically altered, professional indemnity insurance could save an architectural company thousands of pounds.

#6 – How should I insure the business premises?

Given how much your business could rely on its premises, it would be wise for you to ensure the premises either via property damage insurance or warehouse insurance.

While every business owner with premises or a warehouse could likely benefit from these policies, if you deem your firm at risk of theft, fire or flooding, getting cover for these risks is extra useful.

This insurance can be sourced cost-effectively when packaged with other business insurances in a commercial combined insurance policy.

What is commercial combined insurance? – Commercial combined insurance allowing you to buy multiple types of coverage in one go for your business. Find out more here

#7 – What is business interruption insurance?

Unfortunately, sometimes unexpected events such as fires, floods or storms result in the temporary inability to operate your company or use your business premises. Business interruption insurance will help you put your business back in the position it was in before the catastrophic event by providing financial compensation to cover damaged property or equipment.

The inability to run your business due to an infectious disease (like COVID-19) is also sometimes covered by business interruption insurance. However, you should always check your policy wording to know exactly what you’re protected against.

#8 – How should I start looking for business insurance?

Here’s the part many people struggle with: “Where do I start?”

There are so many providers and so many different types of insurance that the idea of having multiple policies taken out from a variety of providers likely feels confusing.

So, if you’re finding it hard to figure out which insurance policies suit your needs considering a combined commercial insurance policy might be the way to go. Combined commercial insurance takes the weight off your shoulders as it allows you to purchase several coverage types under one policy, meaning everything you need is in one place and paid for under one simple policy.

If you’re interested in combined commercial insurance, get a free quote for our policy today.

With our policy, you’ll not only get the peace of mind that your insurance comes from a reputable insurance provider established for over 25 years but also:

Access to a 24hr legal advice helpline

Access to a legal document hub

Instant policy documents

Easy payment options

Access to a dedicated claims service

#9 – How can I find a good business insurance broker?

There are a few elements of criteria that indicate a business insurance broker is worth their salt. For example, it’s a good sign if you will be dealing with a person responsible for looking after the policy rather than simply closing the sale, as this will better incentivise them to ensure you get the most appropriate insurance policy.

It’s also a good idea to check the broker you choose is regulated by the Financial Conduct Authority.

Firms like Blackmore Borley help with a range of business insurance and offer a jargon-free service that is uniquely tailored to each individual business.

Small business insurance: What to look for in a policy – In this piece, we look at the variety of business insurance cover you should consider in your small company

#10 – What else should I know about insuring my business?

Don’t rush your research when looking for suitable insurance. The world of business insurance can be stuffed with jargon, but we hope that our advice and easy-to-understand policy options have cleared much of the confusion.

If you are using a broker, you should expect them to discuss the options with you and address any remaining questions you might have. Or, if you’re buying directly online, just consider that insurance policies can differ in their boundaries and conditions, so always read the small print.

And, don’t forget to consider the optional but valuable coverage options that go beyond the essentials. Cyber liability insurance for example is increasingly vital in today’s digital age, especially if you handle sensitive customer data, protecting against hacking and data breaches.

Additionally, reviewing policy limits regularly and updating your coverage as your business grows or pivots into new markets ensures that you are fully protected against evolving risks. Understanding exclusions and limitations in your policies will also help you avoid surprises in case of a claim.

Next Steps

If you’re looking for business insurance and aren’t sure where to begin, why not use our free quote tool to find a tailored commercial combined policy that will cover all your needs.

Simply fill in our free quote-finding form and answer a few questions about your business (it takes less than a minute).

More on insurance for small businesses

Public liability insurance: why you need it – Not sure if you need public liability insurance for your business? Sam Humphrey from Insure Our Event explains what you need to know

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