Do I have to have business insurance?
All UK-based businesses that employ one or more staff are legally required to have employers’ liability insurance covering a minimum of £10m. This covers you if an employee has an accident at work or becomes ill as a result of working for you. The legal obligation to have employers’ liability insurance applies even if your employees are voluntary, casual or temporary. However, this law does not apply to immediate family members who work for you.
Apart from the aforementioned regulations covering employers’ liability insurance, there’s no obligation for businesses to have any insurance, and as the expenses involved in setting up a business mount up, it may be tempting to skimp on insurance. But as well as helping you avoid the risk of losing it all, business insurance helps you to maintain a stable, safe business – it’s good practice and provides reassurance for employees and clients alike. In fact, business insurance is often required to secure contracts and many trade organisations now insist that their members are properly insured.
How do I choose the right business insurance?
Making sure you have the right business insurance is important, but with so many products to choose from it’s hard to know where to start. Different industries face different risks.
Legally required - Employer’s liability insurance
What does employers’ liability insurance cover? Employers’ liability insurance covers the cost of paying out compensation to employees if they become injured or unwell as a result of working for you.
What level of employers’ liability cover do you need? Employers’ liability claims can be very expensive. If you fail to take out employers’ liability where required, you could face a £2,500 fine for each day you don’t have adequate cover – so it pays to get it sorted!
Good to have - Public Liability Insurance
What does public liability insurance cover? Public liability insurance is an essential cover for most types of business. It covers you for compensation and legal expenses if a customer, client or member of the public suffers loss or injury on your business premises or as a result of your business activities. For example, if a customer has a fall in your premises, they might make a claim for compensation. Public liability insurance covers you should this occur.
What level of public liability cover do you need? Levels of public liability insurance cover range from upwards of £1m. The minimum level of cover a business can take out is £1 million. However, depending on the nature of your business, you may need more cover.
Other types of business insurance
- Business premises insurance - also known as commercial buildings insurance, protects your business premises against fire, lightning and other hazards.
- Business assets insurance, also known as business contents insurance – this usually covers your stock at cost price. Your policy is likely to include cover against theft via forced entry, but won’t usually cover theft by employees.
- Engineering insurance - provides cover against breakdown for business machinery, including computer equipment.
- Professional indemnity insurance - provides protection against any action by clients who believe they received bad or negligent services resulting in a personal loss.
- Goods in transit insurance - Goods in transit insurance covers goods against loss or damage while in your vehicle or when sent by carrier.