Starting your own business venture can be exciting, but it also comes with its risks. Having insurance in place will not only give you peace of mind, but it can also save you from having to pay out large amounts of money if everything doesn’t quite go to plan.
However, with so many different types of policies available, it can be difficult to know where to start. If you’re new to the business world and are looking for some advice on business insurance, here are three things you should know.
1. Some cover is compulsory
To ensure you don’t fall on the wrong side of the law, it’s important to know what types of business insurance you are legally obliged to have. Employer’s liability insurance is a legal requirement for all companies that have employees and it protects you against any claims made by a member of staff who is injured or becomes ill while working for you.
Some firms may also be legally obliged to take out motor insurance to protect any vehicles used for work purposes. Lawyers, accountants and financial advisors may also be required to take out professional indemnity insurance by law to cover the costs of compensation if your customers receive an inadequate service or poor advice.
2. Some cover is considered essential
There are many types of business insurance that are not legally required, but are considered essential. The insurance you need will depend on the type and size of your of business and what sort of assets you need to protect.
Apart from employer’s liability, most businesses need property insurance. This covers the cost of all of the equipment used for your business in the event that it is stolen, lost or destroyed.
Public liability is also advised for businesses that have contact with members of the public. Another important consideration is business interruption insurance. This will cover you for the money lost if your property has been destroyed or damaged and you can’t work.
3. How to work out how much cover you need
Each business will require different levels of cover, and you’ll probably need to select a variety of different policies to suit your needs. The first thing you should do is check your contracts as they may specify a minimum level of cover.
However, you may decide that you require more than your contract states, depending on the type of work you do and what risks there are. As a general rule of thumb, the amount of cover you have should be able to cover the costs of the compensation you might have to pay if a dispute went to court.
The minimum level of employer’s liability insurance is usually £5 million, although most businesses choose to add more. The most important thing to remember when you buy property insurance is to make sure you are not underinsured. Remember to estimate the total value of your property and everything inside.
There’s no denying that getting your head around business insurance can be difficult. However, by bearing advice like this in mind, finding the right policy should be far more straightforward.