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What is business insurance?

Business insurance is a way to protect your business against any accidental losses or claims made against it. Although nothing can stop the unexpected from happening, having the right business insurance policy in place can help make sure you’re at least covered against any financial losses.

Business insurance policies usually include a range of covers, including employers’ liability insurance, public liability insurance, and professional indemnity insurance.

Does business insurance cover you in a pandemic?

Coronavirus restrictions and lockdowns forced businesses of all sizes and across all industries into temporary closure. In some cases, this was because they had to physically close the doors to their outlets, in others it was because supply chains had been disrupted to such a degree that they could no longer function.

While certain business interruption policies may have provided what is effectively forced closure insurance, many business owners found out they were not covered as their policy didn't include this type of incident. Whether you're taking out cover or making a claim, the wording of the policy is crucial.

Does your business interruption insurance include pandemic cover?

If your policy doesn’t include business interruption insurance, then it’s unlikely you’ll be covered against any financial losses caused by having to close your business temporarily. But even if you’ve had the foresight to include business interruption as part of your policy, standard cover usually only protects against closure due to physical damage to your property or ones nearby that restricts access and causes you to close.

Extended business interruption insurance is available to protect against virus outbreaks and specific diseases. But if a disease is new - as was the case with COVID-19 -it’s unlikely to be included in any list of specified diseases. This means it’s doubtful that your business interruption insurance will provide cover in this instance.

To find out if your business insurance covers you for closure in a pandemic or as a result of a new disease, you’ll need to check the policy wording to see if it's included in a list of specific diseases.

Some insurers don't specify a list of diseases but instead provide cover against 'notifiable diseases'. These are any diseases that are required by law to be reported to government authorities so they can be monitored.For more information, check out our guide to business interruption insurance.

What if my supply chain is disrupted by a pandemic?

This is a scenario that could be covered by your business interruption insurance, but only if you have an extension that includes “failure of suppliers” or “unspecified suppliers”.

Not all policies include this extension, and those that do usually specify that there must be ‘Damage’ (perhaps in the form of fire, theft or flood) at the premises of the suppliers or manufacturers and doesn’t include interruption at those premises as a result of a virus or disease.

In short, unless specified otherwise, it's unlikely that you'll be covered for a disruption to your supply chain because of a pandemic.

Do you need business insurance when working from home?

A lot depends upon the nature of the work you do and who actually owns the equipment, and you should always check the policy wording and never assume you’re covered. This goes for any insurance policy you might have.If you’re a sole trader that usually operates from home, your existing cover should also be enough if you’re still effectively operating as usual during the lockdown.

But if you’ve moved any extra equipment into the home to do your job remotely during the lockdown, even if you usually operate from home, you should notify your insurer and adjust your cover as necessary.

Home insurance generally only covers items that you own, so if you’ve shipped any work equipment into your house it’s unlikely this will be covered by your existing home insurance policy. If this is the case, you’ll need to speak to your provider and possibly arrange work from home insurance or a home business insurance policy.

If your business or the company you work for owns the equipment, you should also check whether it's covered for use away from the workplace under the terms of any corporate insurance policy.

Even if you own the equipment you’re using for work, you should check that its replacement value is covered under the amount your policy will pay out for a single item. If it isn’t, you might need to increase your single item limit.

In any case, you should let your home insurance provider know that you’re now working from home, as this could affect the terms of your cover.

What are the main types of business insurance?

Different types of business insurance policies are designed to cover different kinds of risks. The key to getting the right cover for your business is working out which ones you need and which ones you don’t.

For instance, employers’ liability cover is designed to protect your business against any damage claims made by members of staff. If your business doesn’t have any employees (except yourself) then you don’t need this cover.

To give you an idea of what’s on offer, here are the main types of cover you might need to consider:

• Public liability insurance - In case you injure someone or damage something while providing your services.
• Employers’ liability insurance – In case an employee gets ill or injured because of the work they do for you.
• Professional indemnity insurance - In case a customer sues you for damages because of a mistake in your work.
• Commercial building insurance – To protect business premises that you own, whether you're using them or renting them out.
• Stock and contents insurance - In case your stock or equipment is stolen or damaged by flood or fire.
• Product liability insurance – In case a product you have sold, manufactured, or designed injures someone or damages something.
• Legal expenses insurance - To cover the cost of the legal expenses of any claims you make or that are made against you.
• Business interruption insurance - To provide compensation if a disaster or event stops your business from running normally.

What types of businesses are covered by business insurance?

No company can be run completely free from risks – regardless of the size of your business or the industry it works in, there are certain risks you need to protect against. These risks can range from something as simple as spilling tea on a customer’s coat to a product you sell causing serious harm to someone’s health.

In any case, these risks can cause serious financial and reputational damage. And no matter how careful and diligent you are in your work, there’s always a chance that the unexpected can happen.

Having the right business insurance in place is the only way to protect against these risks.

Small business insurance

If you run one of thousands of small businesses across the UK, you’ll have different needs and priorities to bigger businesses and national chains. This means you’ll need specialist insurance that caters for the needs of small businesses and protects against any specific risks yours might face.

If you have any employees, you’ll need employer’s liability insurance as a minimum (it’s a legal requirement). If you use any vehicles for work purposes, you’ll also need specific motor cover (again, it’s a legal requirement and standard motor insurance isn’t enough).

You might also want to consider adding public liability insurance (to protect against damage claims from customers), stock insurance (in case your stock is wiped out by flood or fire) and business interruption insurance (in case something happens to stop you trading – although Covid probably won’t be included).

The insurance team at Bionic can help you work out exactly which types of cover you need.

Limited company insurance

If your business is a limited company, then this will minimise your personal financial liability should it become insolvent and unable to pay its creditors. But that doesn’t mean you’re sheltered from all risks.

If an employee slips and injures themselves while working for you, you could still be held liable and face hefty compensation fees. Or you could still find yourself on the end of a claim if your business has given clients bad advice or a dodgy design that has resulted in them losing money.

The only way to protect yourself against financial loss in such instances is to have comprehensive business insurance that includes employers’ liability cover and professional indemnity cover.

The types of policy you need will depend on how your individual business works, and our insurance team can talk you through all your options to make sure you have exactly the right cover.

New business

If you’re just starting out, it can be difficult to know exactly what risks your business will face. To give you an idea, here are some possible problems you could face and the type of cover you’ll need:

• A customer falls ill after eating at your restaurant – Public liability insurance provides cover in case you injure someone or damage something while providing your services.
• An employee slips at work and breaks their arm – Employers' liability insurance provides cover in case an employee gets ill or injured because of the work they do for you.
• You accidentally publish and compromise a client’s sensitive data - Professional indemnity insurance offers cover in case a customer sues you because of a mistake in your work.
• Your storeroom is broken into, and all your stock is stolen - Stock and contents insurance offer cover in case your stock or equipment is stolen or damaged by flood or fire.
• A burst water pipe in your road means your business needs to close temporarily – Business interruption insurance provides cover when you can’t carry out business as usual due to an unexpected event.

You can also take out cover based upon the type of industry you work in, for example:

• Restaurant insurance – Your restaurant will have fixtures and fittings, specialist equipment, stock, staff and customers to consider. This means your policy should at least include public liability insurance, employers’ liability insurance, buildings and contents insurance, and stock insurance.
• Shop insurance - As a shop owner, you’ll most likely need to cover against risks to your store’s fixtures and fittings, stock, staff, and customers. Your shop insurance cover should include public liability insurance, employers’ liability insurance, buildings and contents insurance, and stock insurance.
• Beauty salon insurance - As a salon owner, the main risks to consider are to the fixtures, fittings, and specialist equipment at your premises, as well as stock, staff and customers. This means public liability insurance, employers’ liability insurance, buildings and contents insurance, and stock insurance should be part of your policy. It might also be worth taking out professional indemnity insurance.

In addition to the cover mentioned above, it’s also worth considering business interruption insurance in case something causes you to close temporarily.

To get the right cover for your business – with no hidden or unnecessary extras – give our insurance team a call on 0800 077 3810.