Small Business Insurance Checklist: What you Need to Cover 10/05/2015 Business Financing You’ve put in the hours and the finances to get your business up and running. So it makes business sense that you should protect your livelihood from any damage, theft or liability – things which could prove highly damaging to your business’ operations and income. You are legally required to have some types of cover such as business motor insurance or employer’s liability insurance if you employ staff. This checklist will set out the insurance that’s required by law as well as other types of cover you might want to consider depending upon the type of business that you run. The purpose of insurance Insurance reduces your business’ exposure to the effects of risks. These risks might include: Damage to or the loss of physical assets such as your premises or business equipment Illness or death of members of staff Compensation claims made against the business or its directors by employees or customers Business interruption caused by external events that might be out of your control Volatility and cash flow pressures following an incident Almost all businesses take out insurance, but the type of cover will vary depending upon the particular risks your business might be exposed to and how much risk you are willing to bear yourself. For many new business owners, it can be difficult to navigate the tightly regulated field of insurance and there are areas where you thought you might be covered, when in actual fact, you are not. For example, if you occasionally work from home, where some of your products or business equipment is stored, your home insurance wouldn’t actually cover the theft or damage to these items. Furthermore, your business is legally obliged to take out certain insurance policies, and we’ll cover these in the next section. Insurance businesses must have by law Certain types of business insurance are a legal requirement. If your business employees people, you must have Employer’s Liability Compulsory Insurance (ELCI). This type of insurance protects your business against claims from employees for accidents or sickness they may suffer as a result of working for you. Another compulsory insurance is motor insurance. Whilst you will no doubt be aware that you must insure your personal vehicle to put it on the road, if your company uses a car, you must purchase third party insurance at the very least. In some businesses, employees use their own vehicles for their job, but they don’t realise that their private policy doesn’t actually cover business use, such as driving to meet clients or transporting goods or other members of staff. If you do use your personal vehicle for certain business needs, you will need business vehicle insurance. Otherwise, you risk not being covered should you need to make a claim. Find out more about business vehicle insurance here. Businesses in certain sectors – such as accountancy, legal and the financial services – are legally required to take out professional indemnity insurance. This type of cover protects against legal liability for losses suffered by customers or unsatisfactory professional advice. Insurance for business needs Some insurers will offer bespoke packages dependent upon business needs, for example, if you’re a retailer, some insurers might provide you with increased stock cover during peak periods, such as Christmas and Easter – potentially at no extra cost. If you own a small building firm, or if you’re a contractor, you’ll be exposed to all sorts of high risk situations every single day, so certain insurers might throw in cover to protect your tools from theft and damage along with your obligatory public liability policy to protect your customers and members of the public from being hurt. Every business has different needs and so, when searching for your insurance provider, try to find insurers who can provide you with specific deals tailored to your sector. This means you might be able to take out a policy which covers something you might not have factored in budget to insure. Below is a list of the most common insurance considerations for all types of businesses. Insure against common business risks If the worst should happen, being covered can mean the difference between keeping your business afloat during a difficult time or being faced with unexpected and unaffordable costs that could dramatically affect your business’ survival. For these reasons risk prevention is absolutely necessary for small businesses where every penny counts. Below is a checklist of the common types of risks for which you can get insurance – and why you should carefully consider taking them out: Building and contents Most businesses will have a business premises. It’s where the majority of your work and earnings will take place. That’s why it’s paramount that you protect this vital asset. There are many unforeseen events that could lead to your business requiring repairs or having to close to the public, such as flooding, vandalism or any other circumstances which are out of your control. Under building contents insurance, all fixtures, stock and personal belongings of staff and customers will be covered. Business interruption Whilst building and contents insurance covers the cost to replace or fix damaged items or buildings, business interruption covers the loss of income incurred if normal business operations are disrupted due to the damage or theft of physical property. So, if your business premises are vital for your, ability to produce revenue, this will be a key insurance policy for you. Personal Accident For tradesmen, the risks of being hurt or injured whilst on the job are much higher than in other professions. But accidents can happen in many other sectors such as pub, restaurants and even salons. To provide peace of mind to your employees who might not be able to work following an incident, personal injury cover ensures a weekly payment will be provided to cover the period of their recovery. Professional Indemnity Cover For consultants, designers, marketers, project managers and other professional services, professional indemnity cover protects your business against the potential financial fallout should a client sue for damages caused as a result of bad advice or a mistake. Claims that are covered under professional indemnity insurance include infringement of intellectual property rights, loss of data, negligence, dishonesty and defamation. Summary The policies mentioned just scratch the surface of different cover you can take out to protect your business. It’s worth carrying out thorough research into the type of cover that your particular business or trade could benefit from should the worst happen. If you’re interested in finding out more about small business insurance, The Association of British Insurers has put together a concise guide. If you have found yourself in financial difficulty as a result of damage or theft to your business, and you need to plug the cash flow gap in between insurance claims, check your eligibility for a Business Cash Advance with our Calculator and get in touch with Liberis.