PolicyBee is an insurance broker, specialising in covering small businesses and freelancers. They’re here to highlight the importance of protecting your business against different risks.
Small and medium size businesses are the backbone of any economy but sadly a worrying number of business owners fail to consider the wide range of products available to protect their businesses. Recently we asked leading protection expert Kevin Carr to highlight his top 5 protection products for business owners to protect businesses against the loss of a key person or owner due to ill health.
Today, we have asked specialist business insurance broker PolicyBee to highlight their top 5 insurance products that every business owner should consider to protect their assets, employees, reputations and businesses.
Insurance for small businesses
What does business insurance even do, anyway?
Well, perhaps a little more than you might think. The business world is tough. The right insurance means your business won’t have its lunch money stolen, or its head flushed down the toilet by bigger companies.
If you want to protect your assets, here are five of the most useful professional insurance products available…
Professional indemnity insurance
This protects your business from the consequences of your mistakes. If a problem with your work costs someone else money, professional indemnity (PI) pays to redo the work, and compensates your client. It covers the legal costs of a claim too.
PI is valuable in all sorts of scenarios: a mistake you’ve made, employee dishonesty, loss of documents, intellectual property infringement, negligence, or virus transmission, among other things.
Without it, you’d have to fix any problems yourself. PI helps save time, money, and your reputation.
Public liability insurance
If you injure someone or damage their property, public liability (PL) pays for compensation and replaces or fixes what’s damaged. Again, it covers any legal fees associated with a claim.
If you work alone and only ever communicate with clients by email, you probably don’t need this one. However, if you ever meet clients or suppliers in person, or work anywhere other than your own office, it’s a useful product to have.
For example, you might drop your client’s shiny new tablet. Or, a carelessly-placed laptop charger could cause someone to trip and hurt themselves. In either situation, your PL has your back.
Office and equipment insurance
This one’s probably the most simple to understand. It covers loss, theft, and damage (including accidental) to the stuff you use to work.
There are a few different varieties to choose from, depending on what you want to cover. General contents insurance covers furniture and non-technical business stuff. Building insurance covers structural damage to your office. Computer insurance is self-explanatory and portable equipment cover for laptops, cameras, and tablets.
Pay particular attention to your level of cover when buying insurance. Sounds obvious, but this needs to match the value of the property you want to insure. If it doesn’t, insurers can apply a principle called ‘average rule’.
If you only insure, say, 20% of the value of your stuff, your insurer could refuse to pay any more than 20% of your claim. Even if your claim is less than your level of cover, they don’t have to pay out.
This might seem unfair, and a little confusing. The point is to discourage people from deliberately underinsuring to save money. If everyone did this, insurers couldn’t afford to pay genuine claims. So in fact, there’s method in the madness.
Employers’ liability insurance
This is an important one. Employers’ liability (EL) insurance is a legal requirement for any business with employees. It compensates employees who get injured or ill because of their work. Like most professional insurance, it covers the legal costs too.
As an employer, you’re responsible for the health and wellbeing of your staff while they’re at work. It’s your responsibility to give them the correct training, equipment, and a safe environment. The Health and Safety Executive are serious about this. They can fine you £2,500 for every day you don’t have insurance. Plus, they can slap you with a £1,000 fine for not displaying your insurance certificate.
Customers often ask if businesses who work with freelancers need EL. It’s not a legal requirement, and the HSE can’t fine you. That doesn’t mean you don’t need it, though.
If you control how and where your freelancer works, you’re responsible for them. That means you could be liable for a work-related injury or illness they sustain. Without insurance, you’d have to pay any compensation and legal fees out of your own pocket.
Business interruption insurance
This one’s a sort of ‘add on’ to your office insurance. Business interruption insurance comes into play if you can’t use your normal office or equipment. It has two parts: cover for increased costs of working, and cover for lost income.
For example, your office could be damaged by flood, fire, or high winds, meaning you have to set up temporarily elsewhere. Or, you might need to hire a camera for a last minute job while your insurance repairs or replaces your original.
It can also make up for any missed earnings, paying the difference between your expected and actual income. That way, an unexpected event doesn’t need to spell the end for your business.
One more thing
Professional insurance isn’t as expensive as you might think.
PI starts at around £140 a year for £250,000 cover, and PL and EL are around £40 a year each. The cost of office insurance varies depending on the value of what you’re insuring. But, it’s still cheaper than replacing your entire office and its contents in one go.
We know that’s a lot to think about, but that doesn’t mean you have to go it alone. Give any decent insurance broker a call, and they’ll be happy to help you decide what insurance is best for you and your business.