Insuring your business

Being adequately insured is essential, no matter how robust your security or safety processes. All employers must have employers’ liability insurance, which provides protection against claims for accidents or illnesses employees suffer as a result of work. If your business uses vehicles, you must at least have third-party motor insurance (although fully comp is more advisable).

Most types of insurance policy are optional. Although they provide another overhead, they can help you to survive should your small business be faced with an unforeseen crisis.

Insuring your premises

You should seriously consider taking out buildings and contents insurance on premises, fittings, equipment and stock to protect your business from losses caused by theft, fire or flood. Another option is business interruption cover, which, in the event of a serious problem, can help you to carry on trading until your business gets back on its feet.

There are no other legal requirements when you start up, but professional indemnity cover is wise for legal and accountancy practices, etc. This provides protection against legal action taken by those who believe they’ve been given bad advice.

Protecting key people

Many small businesses rely heavily on one or two key employees – which usually includes the owner-manager. Key person insurance protects the business against loss of in the event of their absence through serious illness, injury or death.

If the products or services you sell could harm the public, you should consider public liability insurance. It covers damages and legal costs when a member of the public dies, is injured or suffers damage to their property. Additionally, product liability insurance can cover the cost of damage or injury caused by products you make, sell or repair.

Preventing an insurance claim

While you can insure against many risks, it’s better to prevent problems arising in the first place. Some of the key areas to examine include your health and safety policies, how you manage your environmental responsibilities and deal with intellectual property.

Get more advice on insurance 

As with all products, you must shop around for the best quotes for insurance and consider costs against risk. If something goes wrong, without adequate cover, it could finish your business.

An independent insurance broker can help you identify key potential threats and find the necessary level of cover. Some brokers charge, but most are paid commission by the insurance company they recommend to you.

For help finding an insurance broker visit the website of the British Insurance Brokers’ Association. 

Find out more about business insurance on the website of the Association of Business Insurers.