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Business Insurance is a term that covers the different policies available to protect your business. Depending on the nature of your business, some insurance policies may be a legal requirement, but some are optional if you want additional protection.

 

Business Premises Insurance/ Buildings Insurance

This type of insurance will protect your commercial building from a range of risks, including fires, explosions, storm damage, and flooding. The insurance company will want information regarding the type of business you are running, so they can assess any other potential risks.

The level of cover will vary between different policies, and some include accidental damage as standard. If your business is a shop, you will need to make sure the shop front is included in the policy. Shop owners are usually responsible for any glass within the shop, including the shop front, but it is important for this to be insured in case it is damaged due to a break-in.  

It is important that you insure the building for the total re-build cost, not the open market value. This is the amount of money the insurance company would have to pay out in the event of total loss, so it needs to be enough to cover the cost for a full re-build.

If you are renting your commercial property, it is the landlord’s responsibility to make sure the building is properly insured.

Buildings insurance isn’t a legal requirement, however, if you have a mortgage on the property, adequate insurance may be required by your mortgage lender. Most property owners will choose to take out building insurance, as it covers the cost if your property being damaged or destroyed- better to be safe than sorry!

 

Business Contents Insurance

Contents insurance covers your business’ belongings in the event of damage or theft. It is not a legal requirement, but would be very beneficial to you if your business relies on expensive equipment or machinery.

This insurance can cover a whole range of items, from mobile phones and laptops, to furniture and large machinery. If you run an office, restaurant, hotel, pub, retail outlet, or factory (for example), the value of your business contents is likely to be a substantial amount. If your assets are not insured and they are damaged or stolen, this could affect you trading, or stop you trading all together.

The policies will differ between providers, and some will even offer specialist cover for specific industries. 

When taking out contents insurance, it is important that you insure your assets for the replacement value, not the initial purchase price, as items can increase in value over time.

Most insurers will operate under two types of policies - indemnity and new-for-old.

The indemnity policy takes into account the age and wear and tear on the item, and it will cover the item at its current market price. The new-for-old policy will cover the cost for a brand new replacement- the premiums on this type of policy tend to be higher to match the higher pay-outs.

An ‘all-risks’ policy is additional protection which will cover your assets when they are not in the specified building. It can be provided for specific items that you know will be taken off the premises on a regular basis, such as, laptops and mobile phones.

 

Employers’ Liability Insurance

Employers’ liability insurance is a legal requirement for businesses that employ one or more members of staff. This will include:

  • Part-time employees
  • Full-time employees
  • Self-employed Contract workers
  • Temporary/seasonal staff
  • Volunteers
  • Apprentices

If one of your employees becomes ill or has an accident as a result of their work, the employee could sue the business for compensation. Employers’ liability insurance will cover the cost of any compensation and any possible legal fees that you may incur.

This cover is compulsory and you could be charged a fine of up to £2,500 for each day you aren’t insured. This can also be back dated, which could be disastrous for your business if you haven’t been insured for a significant amount of time.

It is important to be aware that any former employees can make a claim even years after they have left the company. This is because some injuries and illnesses can take a long time to manifest themselves. In case this happens, it is important that you keep all expired insurance certificates to show that you were covered during the time of their employment.  

The level of insurance cover your business will need will depend on the amount of people you employee and the level of risks that your business poses - a factory would need more cover than an office, for example. When you are applying for the insurance, the provider will ask a series of questions about your business and will assess the likelihood of a claim being made.

Once you have taken out the insurance, you must display the certificate in a prominent position. It must be available for inspectors to see, and must always be produced on request. If you refuse to produce your certificate or it isn’t displayed appropriately, you will be faced with hefty fines.

 

Public Liability Insurance

Public liability insurance isn’t a legal requirement, but is a necessary precaution if your business has contact with any third party- such as, the public. The insurance will cover any of the costs if a third party is injured or has any of their property damaged because of your business.

For example, if you own a shop and a customer slips over and injures themselves, they are within their right to make a claim against you. The insurance will cover any compensation, which could include any loss of earnings, any future loss of earnings, hospital bills, and costs of repairing or replacing any damaged property. The insurance will also cover any legal fees that you may incur, if your business is found to be at fault.

If you do find yourself to be held accountable, and you don’t have the appropriate insurance cover, the costs you face could be crippling for your business and for yourself.

The level of cover you will need will depend on the level of risk involved with your business. When you are applying for the insurance, the provider is likely to ask you a series of questions to determine the premiums you will have to pay. The questions are likely to include:

  • What type of business you are
  • The number of employees
  • Your business’ level of exposure to third parties
  • The business turnover
  • You business’ health and safety record
  • If you have had any claims made against your business in the past

Even if you work from home, having public liability insurance is still important if you have meetings with clients or customers there. Some clients and customers may even want to see proof of your insurance before they consider working with you. Most businesses will display their insurance certificate as proof of protection.

If you need both types of protection, consider combining your public liability insurance and  employers’ liability insurance together. A joint policy could prove to be cheaper and more convenient to arrange.

 

Professional Indemnity/Liability Insurance

This type of insurance may be required if your business provides professional advice and expertise to individuals and/or other businesses. The insurance covers any costs that you may have to pay if a client believes that you have provided inadequate services or advice that caused them to lose money. This will include any legal fees, compensation to the claimant, or repairs to any damaged property.

This insurance type isn’t a legal requirement, but many professions do need to have this insurance as part of their industry body’s regulatory requirements.

Some professions that may be need professional indemnity insurance include:

  • Financial advisors
  • Accountants
  • Designers
  • Journalists
  • Engineers
  • Teachers and tutors
  • Business consultants
  • Marketing professionals

If you are in any of these professions, there is a large range of risks that you and your business could be exposed to. Some of these risks include:

  • Professional negligence
  • Dishonesty
  • Copyright breaches
  • Confidentiality breaches
  • Defamation/Slander
  • Loss of documents or data

If you have been held accountable for any of these and you don’t have adequate insurance cover, you could be faced with costs that could be crippling for your business.

As with public and employers’ liability, the level of insurance your business will need will depend on the level of risk of a claim being made. For example, if your business deals with a large quantity of sensitive data and confidential documents, there is a higher risk of confidentiality breaches and loss of data. It is important that you make sure your policy is tailored to your business’ industry specific needs.

You can combine professional indemnity insurance with your employers’ liability and public liability insurances, which should prove to be cheaper and much more convenient than having to arrange all three separately.

 

Specialist Business Insurance

There is a wide range of other business insurance policies that are tailored to specific industries. They are optional, but a very sensible option if you need/want additional protection as a safety net. Some may be included in other forms of insurance, so check with your insurance provider if you are unsure.

Below is a list of some of the different types of specialist business insurance policies available:

 

Goods In Transit Insurance

This type of insurance is designed to cover any goods you may be transporting in a vehicle- goods that belong to the business, and any that you may be transporting to a third party. This insurance is essential if you are in the haulage industry or work as a courier. It will cover the goods in the event that they are lost, stolen, or damaged while they are in transit. If you don’t have adequate insurance, you will find yourself/your business footing the bill.

You will need to inform the insurance provider of the rough value of the goods you transport on a regular basis, as this will affect your policy and it is important to not be under insured.

 

Business Travel Insurance

Business travel insurance is good for people who travel frequently for work purposes. It will cover the costs of mishaps such as; stolen, lost, or damaged luggage, and cancelled flights. Some policies also cover any equipment you are travelling with such as; mobile phones, laptops and important documents.

 

Tool Insurance

If you are in an industry that requires you to use, and carry, tools, tool insurance will be essential for you. It will cover the cost of your tools if they are damaged, lost, or stolen. Just keep in mind the cost of the premium, if it is more than the value of your tools, insurance could be pointless.

 

Fidelity Guarantee Insurance

This type of insurance is designed to cover the business if money is lost due to an act of fraud, theft, or dishonestly committed by an employee of the business, during the course of their employment. Fidelity guarantee insurance is often used by companies where the staff are constantly exposed to cash, stock, or other assets. This insurance also covers online and computer fraud, due to the constant increase of cases, as well as any legal fees in the event of a court case.

 

Loss of Money/ Cash on Premises Insurance

This type of insurance is designed to protect businesses in the event that cash is lost or stolen, from the premises, or whilst in transit. Businesses who handle a substantial amount of cash on site should seriously consider this insurance as, if a large amount of cash goes missing, you could find yourselves in debt without any method of having the money returned.

Different policies are available depending on the nature of your business, and some policies have a cap on the amount of money they will pay out, so, it is important to consider how much cash you handle that could, potentially, be lost or stolen.

 

Shop Front Insurance

If you are a shop owner, having shop front insurance is essential. The insurance will cover the cost of replacing glass, shutters and signs if they are damaged during a break in, or malicious behaviour. Most policies should also include the cost of boarding up the broken glass after it is damaged.

 

Engineering Insurance

If your business relies on expensive machinery or equipment, some kind of engineering insurance is very important. There are many policies available that cover equipment from all industries, from trucks and cranes, to computers and hospital scanners. The insurance will cover you if the equipment breaks down, is damaged, or is stolen, including any consequences of such things happening, such as a delay in finishing a project for a client.

 

Cyber-risk Business Insurance

Cyber-risk insurance will give you compensation if your business has a data breach, or if your IT system becomes victim to a malicious cyber-attack. It will cover any income that you lose as a result of the interruption, as well as the cost of any repairs that need to be made.

All businesses that have any kind of IT system should have cyber-risk insurance in place, especially if your business holds sensitive customer information or processes card transactions.

 

Working From Home

If you work from home, you won’t necessarily need to take out separate cover, however, you will need to inform your provider as you may need some additional cover that isn’t included in your standard home insurance policy.

If you don’t mention that you work from home to your provider, in the event that you need to make a claim, it may be invalidated. You may have to pay a small amount more on your premiums to ensure your contents are protected, however, in some cases the premiums can become less. This is because you will be at home during working hours so you are less likely to be burgled.

There are three main categories for working from home; regular business visitors, clerical use, and other business use.

 

Clerical Use

If you work from home and have any sort of equipment, such as a desktop computer, laptop, printer, scanner, or any other specialist equipment, you will need to declare this to your provider as you’re likely to need insurance for clerical use. This will extend your home contents cover to protect your additional business contents. The insurance will protect it against things such as theft, flooding and fire damage- it doesn’t normally cover cash.

If you regularly travel for work purposes, make sure your equipment is covered for when you are away from home as well.

 

Regular Business Visitors

If you regularly have clients/customers visiting your home for business purposes, for example you are a beautician or accountant, you will need to declare this to your home insurance provider. This could have a negative impact on the premiums you pay because your home and its’ contents are more at risk of damage or theft, but is important to have in case of such event.

 

Other Business Use

This relates to you using areas of your home for business purposes. For example, if you convert your shed into a work shop to build furniture, or you use your kitchen to make food to sell. This will also need to be declared to your home insurance provider as it is likely to have an impact on the premiums you pay.

Other considerations: Depending on the nature of your work, there are a few other insurance policies you may need to consider having in place. If you regularly have visitors, you may need public liability insurance , this will keep you covered if someone makes a claim after being injured in your home.

You may also need public indemnity insurance if a client claims that you have been negligent in your work. For example, if you are an accountant and you make a mistake in a client’s tax returns which results in them receiving a fine, they may hold you responsible and demand compensation.

If you have people that work with you in your home, depending on the circumstances, you may also need employers’ liability insurance.

 

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