Whether your business involves working from home or operating a local enterprise with a range of employees, ensuring it is protected should be an essential part of your company. Many smaller businesses overlook the importance of insurance for the protection of both their assets and their employees, when in fact business insurance policies can save entrepreneurs forking out significant sums from their own pockets if something did unfortunately go wrong. Here we will look at the most important types of insurance for small businesses and how outlining what insurance you require in your business plan is a fantastic place to start.
Is insurance a legal requirement?
It is important to note here that there is a huge variety of insurance types for as many types of business. Therefore, some business sectors may have different legal requirements in terms of mandatory insurance they need to purchase to ensure they operate within the law. On the whole however, there is one type of insurance which is a legal requirement for UK businesses, and it applies to employers.
Employers’ liability insurance concerns the compensation provided to employees. This insurance will cover the cost of compensation for employees who are injured or fall ill through work, in addition to any associated legal fees. For a small business especially, this type of insurance will be an important consideration when putting together your business plan as it is an important element for protecting your business.
Matching your needs with your insurance cover
Although other insurance types are not required by law, they are highly recommended to safeguard your business from any losses and/or damages which may occur, in addition to any third party claims and any charges in receiving professional advice. Business insurance is typically sold as a package policy- a culmination of a variety of cover types. For a small business, it is important to match up what you need protecting to a specific insurance policy. Here are several examples of the types of insurance which are essential for small businesses:
Professional indemnity insurance: provides relevant compensation to clients of your business if your professional advice has resulted in them loosing money.
Product liability insurance: provides relevant compensation to a member of the public due to a fault in one of your products.
Public liability insurance: provides relevant compensation to a member of the public for injury, damage or death as a result of your business’s negligence.
Building insurance: provides cover for the physical structure of your business premises.
Cyber insurance: provides protection against both malicious/non-malicious cyber-attacks which could compromise online data.
Vehicle insurance: if your business uses a vehicle it is a legal requirement it is insured, like any other personal car on UK roads.
This list, which is by no means complete, gives a brief outline of the types insurance which would be relevant to small businesses. It is also important to note that all stock should also be insured. Depending on your businesses type, entrepreneurs will need to mix and match insurance policies which relate to the services they provide.
The perfect place to start considering the what insurance is most relevant for your small business is through a business plan. If you would like help with putting together your plan, get in touch today! Contact us online using the form on the right or call 01604 420 420.