A simples guide

A guide to the different types of business insurance

Liability insurance, buildings insurance, cyber insurance – just how many types of insurance do you need? Well, that answer depends on what your business is all about. When providers talk about ‘business insurance’ it usually refers to a package that combines various different types of insurance but they all have one thing in common – to protect your business if a claim’s made against it. And because owning and running your own business is a way of life, it’s important to make sure someone’s got your back so find out exactly what it’s all about in our business insurance guide.

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Types of business insurance

Because businesses come in all shapes and sizes, business insurance does too. There’s a wealth of options available – so it’s worth making sure you’ve got the right cover for what you need. For example, there’s no point having cyber insurance if you’re selling lemonade from your front garden – so here’s a rundown of what you might find on offer.

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Employers’ liability insurance

As a general rule if you dictate where, when and what hours someone works and deduct National insurance and income tax from their wage then you employ them. And if you employ anyone then you need employers’ liability insurance by law. You don’t have to have a mini empire for this insurance to apply to you – hiring just one person even on a casual basis means you’ll need it.

Employers’ liability insurance compensates employees if they’ve suffered injury or illness through work; your policy should cover the cost of any claims as well any legal fees. You need to be insured for at least £5 million but most insurers will provide cover for up to £10 million (just in case).

If your business uses volunteers or unpaid students such as anyone on work experience or adults on a work placement, then you shouldn’t need any extra insurance – it should all be covered under your existing employers’ liability (but always read the small print).

If you don’t have employers’ liability insurance when you should, you can be fined up to £2,500 for every day you go without it. The only exemptions to employers’ liability are if you don’t employ anyone (obviously) or if your business is family owned and employs only close family. Some public organisations are also exempt.

Public liability insurance

This covers you for claims made by the public for any personal injury, death, loss of, or damage to property. It includes cover for claims made on your business premises (an office or your home if you work from there) as well for any events that happen while you’re out and about if you host events or activities in connection to your business.

It’s not a legal necessity unless you own certain businesses such as a horse riding establishment, but if you deal with the public, it’s strongly recommended. All it takes is someone to trip on a step, break a leg and make a claim – you might think it sounds far-fetched but accidents can and do happen, so it’s always worth covering your back.

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Product liability insurance

This compensates anyone who has suffered damage or injury because of a product you’ve supplied. You don’t have to be the manufacturer of the product – if you’ve designed it, repaired it or simply supplied it – you could be held responsible for any damages.

Professional indemnity insurance

If you offer professional advice such as if you’re a financial advisor or even architect, then this is worth considering. It compensates clients for losses made or damage caused as a result of advice given.

Buildings and contents insurance

Just as you’d protect your home and belongings, having business buildings and contents insurance protects your commercial premises and stock. Don’t underestimate what it’ll cost to repair or even replace your premises or the value of your goods – which you should base on cost price rather than sale price.

If you rent your business property, then buildings insurance is your landlord’s responsibility (but don’t forget to cover your contents yourself). Most policies should cover you for fire, storm damage, floods and subsidence.

Motor insurance

Whether you have a fleet or just one vehicle that you use for work purposes, you need to insure it to be legal. The minimum you’ll need is third party but think about whether you could afford to stump up for a replacement if your work vehicle was stolen?

If you employ someone who uses their own car in connection to their work with you, then they’re responsible for their own insurance. But you have to make sure that they have the minimum cover in place.

Other types of insurance

Because your business is unique, you can also investigate more specific types of insurance such as cyber insurance which covers any losses or claims made that are connected to computer systems and networks. If you store customers’ personal details such as addresses, credit card or bank details, then this might be one to consider.

Cyber insurance can help you deal with an incident itself known as ‘first party risks’ (such as if someone hacks into your system, it’ll help manage it). Or, it can cover ‘third party risks’ which will compensate clients because of (for example) a data breach or system failure preventing them from getting access.

Getting the best

Of course, only you know what your business needs and the best way to judge that, is to compare the market and see for yourself. But our help doesn’t stop there, if you want to have a chat about what your options are then we can help you with that too – just tell us and we’ll give you a call back – we love comparing insurance and we can talk about it until the cows come home – so come on, make our day – what are you waiting for?

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