Without the proper insurance, a sudden accident or unforeseen lawsuit can have serious implications for any business.
Especially start-ups, small businesses, and sole traders are economically vulnerable to interruptions to their operations or damage to their reputation. That’s why it’s crucial to cover your business with the right kinds of insurance.
According to recent statistics, small businesses in the UK receive £9 million in payouts for insurance claims every day. The majority of these are for commercial liability claims, like employers’ liability insurance and public liability insurance.
But how, exactly, should you insure your business? The offer is broad, from standard building insurance for your office to add-ons like cover for cyberattacks and terrorism.
Here are the five most important types of insurance your business should have going into 2021.
Employer’s liability insurance
To start with, you’re legally required to have at least £5 million worth of employer’s liability insurance.
If you employ someone, you need to take out this type of insurance to make sure that your team members are covered while working for you. If you fail to do so, you can be fined up to £2,500 a day.
Public liability insurance
Next up, public liability insurance is crucial since it covers any claims from members of the public who have been injured or whose property has been damaged by your business.
If one of your technicians spills coffee on a client’s laptop, or if someone breaks a leg on your property tripping over loose carpeting, this type of insurance has your back.
A subtype of public liability insurance is product liability insurance. This insures your business against any claims for injury or damage that are caused by a product that you sell.
Professional indemnity insurance
Any advice you give to your customers and clients in your professional capacity can potentially have legal consequences. This means that someone could make a legal claim against you if they feel that your suggestions were negligent or caused reputational or financial damage to them.
This is where professional indemnity insurance comes in.
This type of insurance is crucial if consultancy or design is part of your business, as is the case for accountants, estate agents, architects, coaches, and consultants.
Potential clients – especially large companies and government agencies – may even ask you to provide proof of professional indemnity insurance before awarding you a contract.
If your business operations are disrupted, the resulting loss of revenue can be economically disastrous. A fire, for example, can damage your property and put your company out of business for months.
Business interruption insurance covers the income you’re missing out on during this time.
When signing up for this type of insurance, though, be extremely careful to read the fine print. Many businesses have tried to file claims related to business interruptions due to COVID-19, but many insurance policies only cover infectious diseases explicitly named in the contracts.
Building and contents insurance
Finally, make sure to insure your office building, business equipment, and company vehicles. For this purpose, you’ll likely need a form of commercial property insurance or building and contents insurance, as well as auto insurance.
A note for anyone working from a home office: Many home insurances won’t cover anything business-related. For that, there are special home business insurances.