By Kerry Fawcett, Digital Director at iCompario.
Business insurance protects business owners and their assets against the everyday risks that can occur when running a business. In the UK, business insurance is important for self-employed people, sole traders, and limited liability companies. It covers everyday risks including professional mistakes, theft, damage, accidents, and legal fees.
Types of Insurance
There are a various types of business insurances and normally are offered in as part of package or as separate policies. Here is a brief overview of the main types of business insurance cover:
This insurance can rectify mistakes that are made or any damages that need to be paid due to the negligence of the business. Potentially this may include property damage, injury or even death. There are four main types of liability insurance:
- Employers’ liability insurance – A legal requirement for a UK business with employees and it will pay for the legal and compensation costs due to a result of someone getting ill, injured or killed as a result of working for the business.
- Public liability insurance – An insurance designed to protect a business from third party claims. Public liability insurance will cover compensation costs if someone gets ill injured or dies due to work a business has done or is doing, or if damage occurs to their property. Recommended for business activities that involve interacting with the public, for example plumbers, electricians, building contractors and cafes/restaurants.
- Product liability insurance – As suggested by the name, this insurance covers faulty products. Business will need this in case a product they manufacture or supply causes injury, illness, death, or property damage. Even if a business just handles the product it can make them responsible, so it is needed for retailers and shop owners and not just manufacturers.
- Professional indemnity insurance – An insurance that will be useful if the business offers customers advice or a professional service. It covers the cost of business mistakes that have resulted in financial loss or injury for customers due to negligent advice.
Material damage insurance
Similar to liability insurance, material damage insurance has various different types of cover which will suit different business needs. It will protect business property and equipment whether it is damaged, stolen or lost. Here is a short overview of the types of cover:
- Business buildings insurance – A very important insurance to have if work is conducted from a premises that is owned by the business. It will cover losses if the business buildings or premises are damaged due to floods, storms, fires, and theft damage.
- Business contents insurance – This insurance will cover property that is in the business building. Including machinery, computers, equipment, and office furniture. This can be useful even if a company doesn’t own the building.
- Stock insurance – Various businesses have money invested in goods that are stored on the business premises such as warehouses, shops and restaurants. Stock insurance will help a business claim for stock that is damaged, lost or stolen.
- Motor fleet insurance – Third-party insurance is compulsory on vehicles but businesses should consider comprehensive insurance to cover their own losses. Motor fleet insurance enables all company vehicles and drivers to be covered in a single policy and it covers employees if they have an accident that that damages one of the business vehicles, another vehicle or injures people.
- Plant insurance – A plant policy is a useful insurance for contractors and tradesmen take expensive equipment to places of work away from the main business premises. This policy means they can claim compensation if it is lost, damaged or stolen.
Other types of insurance
- Business interruption insurance – This type of insurance will cover for a loss of profit or increased costs due to an unexpected event meaning business can’t carry out business as usual. It can vary from one insurer to another, so it is vital that businesses check what they are paying for with there being no standard business interruption wording.
- Cyber insurance – It can offer protection for a business that is targeted by cyber criminals and has resulted in loss of business, financial loss, public relations, legal costs and liability.
Is business insurance needed?
Business insurance is most definitely needed with some types of insurance compulsory in the UK. Including employers’ liability insurance if a business employs people or if a business owns a premises with a mortgage, the lender will make sure the business has buildings insurance.
Other types of insurance that a business will need to take out will depend on the kind of work and the size of the company. In some lines of work, customers may insist businesses take out specific types of insurance.
Should companies use a broker for business insurance?
Business insurance brokers will be experts in this field and due to the complex nature of business insurance cover, a broker will be able to provide advice on the business insurance policies that will best suit a business.
The last thing a business wants is an insurance claim being refused because they haven’t taken the right level of cover out or the wrong policy. A broker will help avoid this problem and give business owners peace of mind that everything needed is covered.