Everything to know about insuring your company
Running a business certainly keeps you on your toes. But, deciding what kind of insurance to take out can be tough. Plus, knowing what cover is mandatory and what is just helpful to have can be difficult to get your head around. Luckily, Bionic has put together this handy guide all about business insurance to help banish confusion.
What is business insurance?
Business insurance protects your business against the unexpected. There are a few options to consider when thinking about what insurance policies your business might need, but it’s best to safeguard your business against financial risks.
Business insurance can be vital if you need to make a compensation claim or are faced with legal action. But, being insured can also be helpful if your property gets damaged or you’re a victim of theft.
Why do I need business insurance?
Business insurance offers an important safety net for your business. But it can be easy to overlook when dealing with the everyday runnings of your company.
Insurance can help protect business owners against risks, such as theft, damage, mistakes, stock and legal costs. The type of business insurance you choose depends on your company and its unique needs.
Is business insurance mandatory in the UK?
Although it’s wise to have multiple types of business insurance policies, the only type you legally need to have in the UK is employers’ liability insurance (if you employ staff). Every other category of business insurance is optional, but you might benefit greatly from certain types.
The different types of business insurance
There are many options when you’re considering business insurance. It’s important to weigh up your needs as a company and any likely problems you could run into in the future. The main types of business insurance are:
Business liability insurance
Business liability insurance is an umbrella term for a range of policies, including professional indemnity insurance, public liability insurance, and employers' liability insurance.
These are all types of insurance that can protect your company against any losses suffered as a result of normal day-to-day activities, as well as any compensation claims.
Professional indemnity insurance
If you’re operating a business and are offering a service or professional advice — for example, if you’re a consultant or accountant — then taking out this kind of cover is really important.
Indemnity insurance will cover you against claims of negligence, bad advice, libel and error and unintentional breach of confidence. A lot of your clients may want to check you have an up-to-date professional indemnity policy before they put their trust in you.
Public liability insurance
The next type of business insurance is public liability insurance. If members of the public come to your place of work regularly, it’s wise to protect your company from any claims made against it.
If a customer slips on a wet floor in your shop before you put down a wet floor sign, they could have grounds to sue. Public liability insurance could protect you against this.
Employer’s liability insurance
Employers’ liability insurance is compulsory for anyone with one or more staff members. The only exception to this rule is if you work from home and are hiring a close relative to work with you. But if your family business is incorporated as a limited company, employers' liability cover insurance is compulsory
Employers’ liability insurance is created to protect you as the business owner from any illness or injury claims. Most insurers will automatically provide cover of £10 million, this should be enough for a small business, but make sure you check how much your individual company needs before you decide on an insurer.
Product liability insurance
Product liability insurance helps protect against the cost of personal injury claims as a result of a faulty product or loss or damage to property caused by a faulty product. Product liability insurance can secure your business against unforeseen issues with the things you sell to customers.
Business interruption insurance
Business interruption insurance is good for covering any loss of income during periods when you can’t carry out business as usual. Business interruption insurance aims to limit losses and put your business back in the same trading position it was before the unexpected event happened.
The cover is often specific to certain events that cause your business to close, so always read the small print to make sure your business is covered for all the eventualities you need. During the coronavirus pandemic, for instance, many businesses found they weren't covered for closing their doors due to Covid-19.
Business building & contents insurance
If you own your business premises, business buildings insurance can provide cover against damage to the building and its fixtures and fittings. Even if you're a commercial property tenant, there are certain circumstances when you might need to take out this type of cover.
If you’re running your business from home, your home insurance policy might not be enough to cover your business equipment and stock. That’s why you should look into a separate business building and contents insurance. It might also be an option to upgrade your policy from a domestic one to a business one to ensure you’re getting the best cover.
How much business insurance do I need?
How much business insurance costs really depends on your unique business and how many different plans you choose to take out. But you do need employers’ liability insurance at least if you have staff members.
When you’re looking into how much cover you need, you must consider the size of your company and what kind of work your business undertakes. This will affect how much compensation your business could be owed if something goes wrong.
How much does business insurance cost?
The average cost of business insurance in the UK is around £118 a year. But, keep in mind this is estimate is just for public liability cover. However, a lot of small businesses will incur more costs because they choose to cover additional types of risk.
Do I need business insurance if I work from home?
Since the coronavirus pandemic, lots of people are choosing to work or run their businesses from home. Although there are many perks to working from home, it can be difficult knowing what insurance to take out to gain maximum protection.
It’s always best to check what you’re covered for with your current home insurance provider — as many contents insurance policies cover electronics equipment like laptops and printers — before you decide on which type of further insurance to take out.
What insurance do I need if I’m self-employed?
There are a few extra things to consider insurance-wise if you’re self-employed. The following can be useful if you’re running your own business:
- Income protection — This type of insurance protects you if your profits decrease because of sickness or injury.
- Critical illness cover — This is a long-term insurance policy and can be useful if you can’t work due to critical illness.
- Life insurance — Life insurance policies are always wise to have, self-employed or not.
- Private medical insurance — This is also a good idea to have, in case something should go wrong with your health, and you need private medical attention.
What happens if I don’t have business insurance?
Taking out business insurance is always a good idea, as you never know what’s around the corner. If you don’t have insurance and something goes awry, you'll have to pay those costs yourself.
How can Bionic help me run my business effectively?
Getting a handle on your business insurance is essential to allowing your company to thrive.
You might worry you don’t have enough time to deal with the usual business admin while sorting your insurance. Luckily, the tech-enabled team at Bionic can help you save time, hassle, and unnecessary admin when it comes to sorting your business essentials. We compare business gas and business electricity, as well as business phone and broadband to help make sure you're on the best deals.