As your business grows beyond a one-person operation it becomes necessary for you to start to get various different forms of business insurance.
While these might seem like a needless expense, they are actually extremely important for safeguarding the future of the company and in some cases they are mandatory. Here we look at the different types of business insurance that are available and which might be either advantageous or required for your startup.
Building and contents
If your startup is at the phase where it needs premises in the form of any kind of commercial property, you need to consider whether you require building or contents insurance. For most startups that rent their office or commercial space, you don’t need to worry about actual building insurance as this will be covered by the owner of the property. But it’s a good idea to think about contents insurance
This covers you for the things inside the building, which you are responsbile to insure. It should be noted that you may need to get specific cover for expensive electrical equipment and machinery as this wouldn’t usually be covered by a standard contents policy.
Before taking out contents insurance a spokesperson for QuickPick Locksmiths from the locksmith Newcastle division states: “When you purchase a home or business or have your insurance renewed your insurer will send you a covering letter stating their minimum requirements. If your locks do not meet these requirements and you have a break in then your insurance company can refuse to pay you a penny!”
Insuring the premises
If you own your premises outright then it is likely that you need to think about building insurance too. If your premises is affected by any kind of damage, for example from a fire, flood or burst pipes, you could face a very hefty bill to repair it so that your company can continue to function. It’s definitely worth investing in this kind of insurance to get the damage sorted out as quickly as possible.
It should be noted, of course, that it is essential that you keep this kind of insurance up-to-date – if the details of the insurance are not correct you can end up invalidating the policy and not being able to claim. It’s a smart move to have regular insurance valuations to ensure that you are paying the right amount on your premiums. See this great resource list for the many types of insurance valuations on property, from Chartered Surveyors SSJ Surveyors.
For those startups running their business from home there are additional complications. Don’t assume that your standard home insurance policy will cover you – in some cases these policies will be invalidated if you are carrying out commercial work on the premises. Read over the terms and conditions thoroughly and, if necessary, talk to your insurance provider about extending the policy to cover working at home.
Employers’ liability insurance
If your business employs anyone then it is mandatory that you should have employers’ liability insurance. You need to have at least £5m of cover and failing to do so can lead to you being fined up to £2,500 per day that you don’t hold the insurance. The point for this kind of insurance is to cover you for any compensation claims made by employees if they suffer an injury while at work.
This could include anything from slipping and falling to a form of repetitive strain injury or asbestos inhalation. There are a couple of exceptions where employers don’t need to have liability insurance: if you only employ family members or if you employ someone in another country.
Professional indemnity insurance
It could be the case that your business also needs to invest in professional indemnity insurance. This type of insurance is designed to protect you in the event of compensation claims being made against you due to a client believing that you have made some sort of mistake in your work. For example, you could be accused of infringing a copyright or providing advice that causes your client to lose money.
Typically this kind of insurance is required if you offer a service or professional advice. In some cases it may be the case that you are required to have this type of insurance by an industry regulator – for example, financial advisors are required to have professional indemnity cover.
If your business comes into contact with the public – for example, if you have a shop – you may need liability insurance. This covers you if someone suffers an injury on your property. You might think that this would be unnecessary but it’s amazing how injuries can occur even in the most placid of surroundings.