General consensus in the business community suggests that the
majority of the UK’s small and medium sized enterprises (SMEs) don’t
have adequate insurance cover for professional risks and that probably
other types of important business insurance are also being overlooked.
starting a business, particularly if you are starting in a new industry
or profession, insurance is the one of the easiest things to forget.
The extra burden of cost an insurance policy puts on a business can be
off-putting, and it can seem unnecessary in the early stages.
certain types of tradesman or professionals would not be hired without
insurance and most business owners just have too much to lose in the
early stages not to be adequately covered.
Self-employed professionals, for example those who give
advice to businesses or individuals in areas such as IT and accountancy;
those who give out advice on health and fitness such as personal
trainers; or those who offer a service such as photographers or beauty
therapists, should definitely consider taking out Professional Indemnity
offers cover for some situations where you may have been negligent in
the advice given to a client or where there have been serious mistakes
in your work, and as a result you have been faced with paying a claim
for compensation. Any large payouts you might have to make could
seriously cripple or even close down your business, not to mention the
legal costs involved. Professional indemnity could cover these costs,
ensuring your business doesn’t lose out.
For the majority of small businesses,
is the most important type of cover. Whenever a business involves
contact with third parties, i.e. the general public, customers,
suppliers etc, there is the possibility of an accident happening that
may result in injury to that person or damage to their property.
example, a plumber who works on his customer’s property for the
duration of the job may be liable for any accidents that happen there as
a result of his presence. Let’s say our plumber has been installing
some piping in a kitchen. A pipe bursts once he has completed the job
and the resulting flood ruins the plasterwork, wooden floor and some of
the electrical appliances.
The plumber would probably be liable
for the cost of repairing the damage. Or perhaps while he is carrying
out a job, his client trips over a piece of stray piping and is
seriously injured. The client may be able to claim compensation against
the plumber, which if awarded would probably be attached to legal
Public liability insurance is the type of cover that
would protect against these sorts of incidents. If you work in a high
risk environment or with tools, it is also important to take out
personal accident insurance on top of your business cover
If your business employs staff, even on a part-time or temporary basis, you must take out
– it’s the law. You legally need to have a minimum of £5m cover,
however many insurers will automatically put you down for £10m, so if
you only have 1 or 2 employees you may want to double check how much
you’re paying for.
Employer’s liability insurance may seem like a
nuisance and unnecessary extra expense but the law is there to protect
you and your business. If an employee is injured or becomes ill
the course of their work, and it can be proven as your fault, you could
face a claim for compensation. This policy will ensure that your
business is protected from this cost. Another good reason for making
sure you comply with this law is that there is a £2,500 fine for each
day you are in business without cover.
There are some notable exceptions to the law:
- If you are not a limited company and you only employ yourself or close family members.
- If you are a limited company and have 1 other employee who owns 50% or more of the share capital.
In addition to these three types of insurance, there are
other covers which can be equally important, depending on what your
For example, shops, tradesmen and small businesses
may want to include Business Interruption Insurance under their policy.
This cover compensates your business for lost income when your business
is forced to suspend due to an event that is stated in your policy. It
could be for an incident as small as a power outage lasting a couple of
days that prevents your shop from opening, or one as big as a fire on
your premises which could prevent your business from opening for weeks
If your business holds any stock on its premises,
insurance can be taken out specifically to protect it from theft, damage
or destruction. There may be certain conditions attached to this type
of insurance which dictate the manner in which the stock has to be
stored. This is especially the case with specialist stores (antique
shops for example) or flammable stock like books or paintings.
you can get insurance to cover your tools if you are a tradesman. This
can be a vital cover as good quality tools used by professionals are
often very expensive and sometimes take time to replace. Any loss would
be detrimental to a business where clients expect reliability.
well as general theft from outside parties, you can get cover
protecting your cash, tools and stock against theft by employees.
seems like a lot of different insurance policies to undertake and one
would assume that the cost for so many would be prohibitive. Many
insurers, however, will include all of them under one policy and by
doing so can cut the cost down. This also makes it easier when the time
comes to renew.
Companies such as Simply Business can help make
the buying process easier by offering a range of online quotes to
compare from leading insurers, which are based on your individual
information. You can either buy instantly online and view the policy
document attached to each quote given, to ensure that you are covered in
the right areas. Or call the UK contact centre to run through the
quotes if you are unsure.