What insurance cover does my business need?
The 27th June is National Insurance Awareness Day. We know buying insurance for any small business can be a baffling process; how do you know which insurance policies are needed?
Buying insurance for any small business, whether you’re a one-man band working from home or have a small number of employees based in separate working premises, how do you know which insurance policies are needed? Do you need professional indemnity cover, or public liability protection? And if you know you need it, how much do you need to buy? Will that claim against you be for £1 million or £10,000? At kinex, we believe that to ensure your business is properly protected you need to consider and understand all the risks your business may face.
Covering your assets
It’s probably worth beginning by looking at what ‘things’ or physical assets your business has e.g. computers, laptops, office equipment, and not forgetting any books and journals. Coming to some sort of realistic estimate here will help you arrive at a figure for office contents cover. You should be careful not to underestimate the overall value of your contents; think about what would happen if your office was entirely destroyed by a fire or flood. How much would it cost to replace everything your business owns?
Covering your employees
Secondly, if you have employees, there is a legal obligation to buy at least £5 million worth of Employers’ Liability cover which will protect you in the event that an employee sues you for being injured at work. Next, consider if you deal with people coming on to your premises or whether you come into contact with members of the public. Public Liability cover, which protects you in the event a member of the public is injured or property is damaged as a result of your business’s actions, is generally available in increments from £1 million upwards – think of the worse case scenario that could affect your business when choosing how much to buy.
And if you make a mistake
Do you offer professional services such as IT or marketing consultancy for example? Then you will need to think about having Professional Indemnity cover which protects you if you make a mistake which costs your client money. The cover can provide for legal costs and financial compensation. Again, try and think of the worst case scenario when considering how much cover to buy. In an economic downturn small businesses, particularly in the IT sector, often see an increase in legal action from their clients who, in a bid to save money and escape from a contract might consider suing a supplier for ‘breach of contract’ or not providing the service they had agreed to. If this is a risk you face, you should ensure your Professional Indemnity insurance will cover you. Buying insurance can be confusing but if you can break down each element of your business you can start to understand the risks you face and assess the likelihood of each one damaging your business.