Insurance may feel like a cost you could do without, but it’s a protection you can’t do without. The type of insurance you need for your start-up will vary depending on several factors, including the type of business, where your business is being run from, and if you have employees. We’ll go over some typical examples (and yes, you can claim your insurance policy as an allowable expense!)
If you use a car for your business
Car insurance is a legal requirement for every driver, but did you know there are special considerations if you drive for business as well as leisure or commuting?
Using your own car for business purposes
Car insurance is issued based on what you use the vehicle for, so if you don’t already have business use on your policy, make sure you either upgrade your personal car insurance to cover business purposes too, or get business car insurance.
If you have an accident without it, you might not have cover – and that can be both very expensive and a legal issue.
It’s also worth checking the car’s contents are adequately covered, too. If not, you could lose a fortune in stock or equipment should anything happen.
Company vehicles
Vehicles used solely for your business, be they cars or vans, will need commercial car insurance. It’s not the same as business car insurance!
If you run your business from home
Running your business from home can be a great way to save costs, or you might simply live ‘above the shop’ as it were. Just make sure you have the correct insurance in place to cover any activities taking place there.
Buildings and contents insurance that covers business use
You need to make sure your buildings and contents insurance is adequate. When getting a quote for buildings and contents, you’ll be asked to if your building is only used for domestic purposes.
Don’t be tempted to say no if that’s not true, particularly if you have expensive equipment or stock in your home. Answer yes if you:
- Have any regular business-related visitors to the property (more than once a month, advises GoCompare)
- If you or anyone else run a business from the property
- If you have paying guests staying there
Many standard policies will cover limited business use with little or no extra fees, but check what protection you’re getting and consider business insurance if you’re not getting adequate cover through a standard policy.
Protecting your business against claims
There are different types of insurance available which can help your business if anyone needs to claim against it. This type of policy can sometimes become mandatory depending on what sort of business you run.
Public liability insurance
Public liability Insurance protects you against compensation claims and the legal fees involved in defending against them. These claims could be from customers, clients, or anyone else who feels your business has been responsible for injury or damage.
Examples might be a customer who trips on an uneven step and breaks their ankle, or damage that occurs to someone else’s property while you’re having work done or moving bulky stock.
It should also cover the actions of yourself and any employees when you’re on someone else’s premises, but always check exactly what’s covered.
Professional indemnity insurance
This is sometimes confused with public liability insurance – not helped by the fact that some companies offer a joint policy!
Professional indemnity insurance covers you against claims from customers or clients who have been adversely affected or financially disadvantaged by taking your advice or using your services.
This could be anything from the fire or flood resulting from electrical or plumbing work you’ve undertaken, to losing money because a service you supplied was delayed or inadequate.
Lawyers, accountants, and financial advisors must have this type of insurance by law.
Product liability insurance
This may sometimes be covered by your public liability or professional indemnity insurance. If it’s not, and your business sells products, ensure you take out product liability insurance.
This covers you against claims arising from injury to members of the public or damage to their property caused by products you make or supply. An example might be a small child choking on part of a toy that’s come loose.
If you have employees
Employers must have adequate insurance – it’s a legal requirement.
Employers’ liability insurance
The minute you employ someone, even on the most temporary or casual basis, you must have employers’ liability insurance in place.
This insurance will cover your business for claims and legal fees if an employee seeks compensation after being injured or taken ill because of their work.
The Health and Safety Executive (HSE) is responsible for enforcing this law and if you don’t have cover in place, they can fine your business up to £2,500 per day that you don’t have insurance in place (and even close you down).
You should display your employers’ liability insurance certificate in a prominent position and you’re legally required to keep a copy of it for a minimum period of forty years. You’re also obliged to show it to the HSE if requested. Failure to comply with either of these conditions above can result in a fine of up to £1,000.
Protecting your business premises
You might need insurance for your premises and contents, even if you’re a tenant rather than the owner.
Business building and contents insurance
This is necessary to cover your business against damage to premises or the loss of tools, materials, stock, packaging, furniture, appliances and IT equipment. Make sure you take the time to realistically value everything you would have to replace, not just the obvious bulk or high value items.
Desks, the fridge, the stationery cupboard; everything would have to be replaced if a fire occurred at your property, so make sure that if the worst happens, there will be enough money to start again.
Business interruption insurance
If you can’t work because vital equipment has been destroyed or stolen, or because your premises have been damaged, then you’re going to lose money. Business interruption insurance will help you recoup that lost income.
Insurance can be costly and with so many other costs to consider, it can be easy to put off getting the cover you need. But bear in mind you’re taking a huge risk—and that just one compensation claim or burglary at your premises could be enough to bring your business to its knees. Don’t take the chance! Get the cover you need now.
