It may seem like a laptop is all you need to start your own company, but there are important insurance issues that even the smallest businesses needs to be aware of. In some situations, having business insurance is merely advisable, but it can also be a legal necessity or a professional requirement.
There are a plethora of business insurance options available, and some of them may prove vital to protecting the future of your company. Below we have outlined a few of the insurance options you should consider for your start-up business.
Employers’ liability insurance
If you plan on taking on even a single employee (including temporary staff, apprentices and volunteers) then you are legally obligated to have employers’ liability insurance. The insurance protects your workers should an injury occur while working. The minimum protection permitted by law is £5 million and you can be fined up to £2,500 for each day you’re not covered. This is not an insurance to overlook.
Professional indemnity insurance
Professional indemnity insurance is often necessary for businesses that provide advice/expertise to clients, or are responsible for intellectual property. A professional indemnity policy protects them from claims, especially those related to negligence, made by an unsatisfied client. Some professional bodies and regulators require this insurance of their members, especially in fields such as law, accountancy, consulting, architecture, and IT.
Business premise insurance
Even if you already have home insurance, if you are going to operate a business from your residence then you will want to consider business premise insurance (or combining the two). Premise insurance will protect your building in the eventuality of damage caused by fire, flood, or other disaster. If you are leasing, or going to lease, your business location, then the premise insurance is the responsibly of the landlord. If your business maintains a shop front however, then the premise insurance is probably going to be your responsibility.
Whereas premise insurance protects your building, contents insurance provides cover for the items within. It is not legally required, but is recommended if your business relies on expensive equipment. If you want to work from home then be sure to review your current policy. If it doesn’t cover your business equipment then you might need to revise or replace it.
Public liability insurance
Although not mandatory, if your business is going to have any contact with the public, including clients, then you should look closely at public liability insurance. It will protect you if a third party enters your place of business, whether home or office, and is injured in any way or their property is damaged. Consider, for example, that you run an art-studio from your home and a client trips over an easel during a portrait session and fractures a limb. You would be insured against any potential reparation claims by a public liability policy. It is also helpful to note that public liability insurance can protect you if you conduct your work events off-site.
Income protection insurance
There are a host of insurance products designed to protect your income if you fall ill, have an accident that prevents you from working, or are unemployed for a period. These are broadly split into short term and long term income protection, with the former covering your salary over a short period of time and the latter covering your salary if you were unable to ever work again. Most policies will be able to cover up to 70% of your gross salary as a maximum and pay-outs are tax free. Income protection insurance can be a very sensible option for the self-employed or small business owners, who don’t have the safety net most employees have in terms of redundancy packages and sick pay.
There are plenty of insurance options available, but your initial focus should be on the policies that are essential for protecting your business. Take the time to review the needs of your company and find an insurer that will tailor your insurance policies accordingly.
About the author: Matt Sanders is a spokesperson on insurance for Gocompare.com. He has commented extensively on a whole range of insurance and money related matters and closely follows the latest changes and trends in the sector.