A business insurance is necessary if you run a company of your own, and you could be violating the law without it. Here is a guide on how business insurance works.
How does it work?
If you experience financial loss while carrying out your business activities, it can pay out a cover for:
|Professional indemnity||Property damage|
|Public liability||Tools and machinery|
It decreases uncertainty since your business can continue to operate if something goes wrong.
You can avail basic policies that are designed for self-employed tradesmen or professionals; or more comprehensive cover for bigger companies and franchises.
Think about what your business requires and try to look for a package policy that can cover everything. You can look for a policy by:
- Going directly to an insurer
- Using an online comparison
- Discussing your needs with a broker
What types are there?
The different types of insurance that safeguard your liability as a business include:
- Employers’ liability: Pays out if you need to compensate your employees, if they die or if they are injured as a consequence of working for you.
- Public and product liability: Pays out if a third party or their property is damaged or injured because of your business activities.
- Professional indemnity: Pays out if a client accuses you of damages that result from your professional advice (e.g. if you are an accountant or a solicitor).
- Legal expenses: Covers legal fees for court proceedings including tax disputes with HMRC, or employment tribunals.
The types of insurance that safeguard your commercial premises and its contents include:
- Business interruption: Covers any financial losses that you experience as a result of not being able to trade, due to property damage. For example, if your store is flooded.
- Commercial property cover: Covers damage to your building, contents and any stock that your business owns.
- Goods in transit: Covers damage, theft, or loss of your business property while it is being transferred from one place to another.
You can avail package policies that allow you to combine various types of business insurance, and you can choose to cover more than one business on a policy.
Do you need it?
According to the law, you need to have certain types of business insurance. For example, if you employ voluntary or paid staff, you must have an employers’ liability insurance policy.
There are also some professions where it is mandatory for you to have a professional indemnity insurance, like insurance brokers and financial advisers.
Other types of business insurance are voluntary, but you should examine property cover if you have a mortgage or long-term lease on commercial premises.
How much does it cost?
The price you pay for business insurance will depend on:
- Your annual turnover
- The type of business you run
- The size of your premises
- How many employees you have
- The level of cover you need
Once you have determined what cover your business demands, shop around and compare quotes to discover the most competitive policy.
How to make a claim
If you wish to claim on your business insurance, immediately contact your insurer and give them as much information as possible.
Most business insurers run a 24-hour claims helpline. However, they may wish to visit you before they settle your claim to discuss the matter in detail.