When creating a new business, insurance is the one of the easiest things to forget -especially if starting in a new profession or industry. The added cost insurance places on a small business can be daunting - and can seem an unnecessary one, particularly in the early stages.

By Chris Slater, head of insurance, simplybusiness.co.uk 

But the fact is that many tradesman or professionals, be they new or established businesses, could not get a job without insurance. And it is a stark reality that most business owners have too much to lose operating without adequate cover.

With this in mind, we outline the small business insurance basics. The following insurance should be considered by many businesses.

Professional Indemnity                                                             

Professional Indemnity insurance protects self-employed professionals who give advice or provide services to businesses or individuals. PI covers situations where a business may have been negligent in advice provided to a client, or where serious mistakes are made, and a compensation claim results.

Large payouts following such claims - not to mention any legal costs - could seriously cripple or even close down a small business.

In many cases, legal costs can exceed any damages as these can run into tens of thousands of pounds - sometimes to defend an entirely spurious claim. Professional indemnity cover can protect against these costs, ensuring the business doesn’t lose out – and in some cases, potentially safeguarding its existence.

Public Liability                                     

For the majority of small businesses, Public Liability insurance is the most important type of cover. Whenever a business has contact with third parties – in the form of the general public, customers, suppliers etc. - there is the possibility accidents, potentially resulting in injury to a person or damage to property.

Claims for Public Liability can easily run into the tens of thousands, depending on the type of work and the extent of the accident. Again, without the right level of cover, a small business may not survive such a financial impact. 

Public Liability insurance ensures that the public is able to claim fair compensation, but a business is shielded from the costs.

Employer's Liability                                             

Any business employing staff, even on a part-time or temporary basis, must by law take out Employer’s Liability insurance. The legal minimum cover is £5m. However, many insurers will automatically cover clients for £10m so it is always worth double-checking what the business is paying for.

If an employee is injured or becomes ill during the course of their work, and this can be proven to be the fault of the business, an employer may face a claim for compensation. Employers’ liability insurance protects the business from this cost.

Tailored business cover                                       

These are the essentials of business insurance. However, depending on the nature the work a firm does, other types of cover may be equally important.

For example, shops and tradesmen may want to consider Business Interruption insurance. This covers firms for lost income when forced to suspend operations due to certain events laid out in the policy.

This might be an incident as small as a power outage preventing a shop from opening, or a major disaster, such as a fire on the premises forcing a closedown of several weeks or even months.

If the company holds stock on its premises, insurance can be taken out specifically to protect this from theft, damage or destruction.

Similarly, insurance can be taken out to protect a tradesman’s tools or specialist equipment. This can be a vital cover, as high quality or precision tools used by professionals are often very expensive and can take time to replace.

As well as general theft, insurance policies can also protect cash, tools and stock against theft by employees.

The big picture                                           

This may seem like a minefield of potential policies to undertake, and buying each and every one may be cost-prohibitive for smaller firms. However, many insurers offer a single, comprehensive policy to keep costs down and simplify the process when it comes to renewal.

Comparator sites can help make the buying process easier, offering a range of online quotes from insurers, and allowing business owners to view policy wording and documents as well as premiums before buying.

For more information on buying insurance for your business, visit www.simplybusiness.co.uk

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By LaunchLab.co.uk  on   Oct 08,2008

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Keywords

insurance    money    safety    SMEs    liability    cover    small business   

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