The right key for the right lock

It’s an exciting time setting up your own business. At last you have the freedom to run things the way you want them to be and to start really using all your skills – and developing a few more too. So it’s no wonder that between January and June last year a record number of over 342,000 new businesses were set up in the UK.

But one thing that all new businesses have in common is the need to have a sound combination of insurance policies from the very first day that they open for business to protect themselves, any employees that they may have and the general public too.

There are three main types of business structures most commonly established in the UK and these are sole traders, partnerships and limited companies. Just a quick look around the many different kinds of insurance available for businesses reveals a confusing array, different kinds of businesses have specific needs.

Sole traders

This is the most basic kind of business and, as such, has no legal obligation to have any kind of insurance, although it would obviously be sensible to have building and contents insurance to cover the premises from which the business operates. If the business deals with the public in any way then having public liability insurance would also be a very wise precaution to take. This would cover any injury being caused by the business and many organisations will insist on their suppliers having it in place.

Partnerships

These are similar to sole traders in that the business is not a separate entity from the partners. Again, public liability insurance is a good idea and another kind of cover which recognises the importance of the partners in the enterprise is key person insurance. This provides financial compensation if a key member of staff is seriously injured or dies and it also helps to protect against lost income.

Limited companies

Limited companies have far more legal requirements than either sole traders or partnerships and generally tend to be more complex or larger enterprises – meaning that the following insurances would be a good idea:

• Public liability insurance – As with the other kinds of company, if there is any interaction with the public then this cover is essential.
• Professional indemnity insurance – This protects the business against claims for negligence by any of its employees.
• Employer’s liability insurance – Any business with any employees, even part time or temporary, must have this insurance by law – in fact you can be fined up to £2,500 a day for not having it. It covers employees for any injury they sustain while working for the company.
• Directors and officers insurance – The directors and officers of limited companies have specific responsibilities and this provides cover to pay for any legal costs that arise from getting them wrong.

While these are the main insurances needed by companies in the UK there are a whole host of other products to choose from. These range from insuring against bad debts to cover in case a product that’s sold by a company causes injury to a customer – and just a quick search online will reveal many more. So it’s a question of picking and choosing just the right ones to protect you, your business and your customers and to give you long-lasting peace of mind.

Then you’ll be able to have the confidence that everything is covered – and so are you.