What will I need and what will it cover?
The type of insurance you need will depend very much on what you do, here’s what you might need to consider:
• Professional indemnity insurance – if you provide professional advice to customers, for example if you’re a solicitor, accountant or financial advisor then this is worth considering. It covers the cost of compensating your clients should they suffer any loss or damage because of the advice you’ve provided.
Typically, professional indemnity cover will only cover you for claims made while the policy is active – not when the event occurred. So for example, if you had cover in 2015 but no longer have it and someone makes a claim in 2016 for an event that happened in 2015 – typically you won’t be covered.
• Public liability insurance – This covers you for claims made by the public for any incidents that happen in connection to your business. This could mean providing compensation for injuries, loss or damage to property. If you invite members of the public into your home for work purposes, then this type of insurance could save the day.
But it’s not just about people coming to your home, if you take your business out and about such as if you host events or activities then public liability insurance will also cover you for that – handy to know because accidents can happen anywhere and usually when you least expect it.
Some businesses must have public liability insurance by law – such as horse riding establishments – your local council should be able to help you with your legal obligations.
• Employers’ liability insurance – this will compensate any employees that become ill or are injured through working for you. You’ll need this by law even if you have just one employee (either part time or full time). If you don’t have it, you can be fined up to £2,500 for each day you go without it. You’re obliged to have insurance for at least £5 million but most insurance providers will stipulate £10 million in their policies.
• Product liability insurance – if you design, manufacture or supply a physical product then this will compensate anyone who makes a claim against your business due to a faulty product. Even if you’re just importing, supplying or even simply repairing the goods, you could be held responsible for any damage or injuries the product causes. Most businesses buy policies that cover them from anything between £1 million and £5 million.
• Business buildings and contents – you might think the lines here are a bit blurred if your home is also your business, but it’s also all the more reason why you should have adequate insurance. Business buildings insurance will usually cover your property for personal and business use so you’ll probably only need one or the other.
However, contents insurance is another matter. If you rely on expensive equipment for your home business, then it’s worth taking out a separate business contents policy – your standard home contents cover just might not cut it. The best way to calculate what you need, is to objectively look at what equipment keeps your business going, add it all up and then see if your existing contents policy is enough. It’s all too easy to underestimate stuff we take for granted.
• Vehicles insurance – if you use cars or vans for work purposes you’re also legally obliged to ensure your vehicles are insured with at least third party cover.
• Personal accident cover – if you own and run your business, what would happen to it if you became ill or had an accident that prevented you from working? Personal accident insurance means you’d still receive a salary whilst you recovered giving you valuable peace of mind.