There are many situations that can be covered by various types of business insurance, some compulsory, others advisable but how does a business choose what is essential?
To some extent it may be about assessing the risk for a specific business but inevitably it will also be determined by how affordable non-essential cover may be.
Business insurance required by law
Most employers must by law insure against liability for injury to their employees arising out of their employment under the Employers’ Liability (Compulsory Insurance) 1969 Act. It should cover all the places where employees are working, whether in the UK or elsewhere.
The minimum level of cover is £5 million and businesses must both display copies of the certificate of insurance prominently where employees can see it and they are advised to keep a copy of the insurance document for a minimum period of 40 years.
The Health and Safety Executive (HSE) is responsible for enforcement and has the power to fine up to £2500 for any day when you are without suitable insurance. If you do not display the certificate of insurance or refuse to make it available to HSE inspectors when they ask, you can be fined up to £1000.
Other business insurance policies to consider
While not required by law other types of cover may be advisable and these will depend on the nature of the business.
Professional Indemnity cover, for example, is likely to be important to such businesses as legal and accountancy firms, architects & design practices and professional advisers.
For anyone selling products whether online or via e-commerce, it is important to have product liability cover in case a product they have either manufactured themselves and supplied or simply bought in and supplied causes damage to either a person or their home for which the customer may then claim compensation. Remember the Samsung phones that caused fires.
Public liability insurance is another business insurance that many would be advised to have, especially if members of the public, suppliers and others visit their premises, as is the case with retailers, but also if they supply a service that is carried out at customers’ premises.
The fundamental question to ask is whether there is a chance that your business activity could cause damage to the public or to their property. Lawyers love customers who are injured while in a shop.
Equally, where a business has contractors regularly supplying services at others’ premises and therefore using vans to travel and to transport expensive tools and equipment insurance cover against theft from the vehicle may be essential, as indeed are the obvious vehicle and premises insurances.
There are also lots of add ons to consider such as policies that cover production delays due to strike action or when equipment breaks or loss of profit due to flooding or fire, and many more scenarios that might be considered.
Where do you go for insurance cover?
The first step is to seek advice from any trade association of which your business is a member. It may be also that appropriate insurance cover is included in your membership fees. One example is the market traders’ association who provide insurance for those who sell goods at craft fairs, indeed many event organisers carry insurance that covers the stall holders.
Failing that, seek out a knowledgeable insurance broker, who can provide advice as well as discuss the pros and cons of the different policies. They can also search out relevant cover specific to the business’ needs. That way cover may be more appropriate and affordable than a combined all-risk policy, parts of which may not be relevant.