You have worked hard to build a business and things are ticking over nicely; money is coming in and your business is providing you and your family with an income; the future looks bright. What could possibly go wrong and what can you do about it?
Lots of things can go wrong, including many things that you may not have even thought of. The key, of course, is insurance. But, what exactly do we mean by that? Insurance is a general term meaning a guarantee, in the case of business insurance, of compensation for specific losses such as damage to property, illness, death, accidents, negligence, etc. Compensation is specified in each case and a premium is paid for the privilege of having cover for those possible eventualities.
- There are a number of things that you need to know about insurance:
- Essentially it is a facility to reduce financial hardship.
- Most insurance policies will cover only a percentage of the loss incurred.
- The premium that you will pay is based on an assessment of the risk involved.
- The assessment of the risk will be based, by the Insurer, on the probability of the insured event happening.
- You will be asked for full details of your circumstances when you apply. It is important to answer all questions honestly and accurately, otherwise you may find that you are not covered!
- The Insurer will need evidence of the loss and you should always be mindful of retaining any relevant information; this may include, documentation, photographs, witness statements, etc.
- The devil is in the detail! There will always be a contract between your company and the Insurance Company. This will set out exactly what is covered, the level of cover, the period of cover and what premium needs to be paid. You need to read the contract to make sure the that it covers your exact requirements.
Insurance policies are best set up via a broker. A good broker will ensure that you have the correct level of cover at a price that suits you. They may also give you options depending on your budget and circumstances. Brokers are professionals and should not lead you into a policy or policies that are unsuitable. Do take care to choose your broker carefully; it is worth checking that they have the right qualifications; also look at any online reviews.
Essentially there are 5 types of important insurance for your small business that you should consider:
- PUBLIC LIABILITY INSURANCE
This is one of the most important. Essentially it covers the cost of any claim made by members of the public against your business. It encompasses things like personal injury, negligence, or loss that may be incurred as a result of your business activities. A useful “add on” to this might be legal expense cover if claims have to be contested in court.
Depending on your type of business, this cover may be required if you engage in any activity which may put a member of the public at risk (for example, you may have members of the public attending your premises, for whatever reason, who could be exposed to hazards such as tripping up or slipping). Indeed, any reputable firm doing business with you may insist on such insurance being in place.
Cover will always specify a limit. You will need to be content that this is adequate for your circumstances. An insurance broker will always help you with that assessment.
- EMPLOYER’S LIABILITY INSURANCE
If you employ people, you really should have this type of insurance in place. If an employee is injured at work or get ill through work, you will have to compensate them. Not to have adequate cover could cripple your business.
The level and cost of cover will depend on how many employees you have and the nature of the work that they do.
- BUSINESS INTERUPTION COVER
This speaks for itself. You would be covered if your business was affected by specified events which are out of your control. Do carefully check any exclusions (there will always be some!)
- PROFESIONAL INDEMNITY COVER
This covers you if you find yourself or your company has been negligent as result of services/advice that you may have provided. Depending on the nature of your business, you may find that this is essential in order to acquire clients; in other words, clients may insist on it.
- CONTENTS COVER
This is not very different to the sort of cover that you would have for your own home. You would be covered for the loss or, perhaps, damage to items in your office – computers, furniture, carpets, etc. Again, cover would depend on what you have in your office/premises. Do ensure that you place adequate valuations on your items and be aware that most of these policies do not cover what they call “betterment” . So, if you replace something which is the subject of a loss, then you will not be allowed to replace it with something that is better than that item!
Finally, do choose carefully and think about using a broker rather than a comparison site.