Insurance for smaller businesses - a checklist
When your business is new and cash flow is tight it can be tempting to skimp on insurance altogether – after all, who needs yet another expense? For all too many small business owners, however, taking the "it'll never happen to me" approach is the most expensive mistake they'll ever make. Sadly, accidents do happen, and if you're not properly insured for them, they can cost more than just money – they could cost you your business.
Protecting yourself from the financial damage caused by things like fire and flood, however, doesn't have to be expensive. And by choosing the best type of insurance for your business, you'll be buying peace of mind along with your policy.
What to insure?
As with any other type of insurance, there are different types of policy to consider. While it may seem to make sense financially (especially if you're operating on a budget) to go for the cheapest option, you should think carefully about your business, from the buildings you work in to the equipment you use, and even the staff you employ. How well would your business be able to function if any of these were lost? If the answer is "not well" or "not at all", then they need to be insured.
What to insure against?
While there are certain events that can affect any business in the world (fire, flood and storm damage being the most obvious examples), the type of insurance you'll require will depend on the type of business you're running. If, for example, you and your staff work with heavy machinery, you're at greater risk of accident than someone who works in an office, and your insurance policy will need to reflect this.
Business insurance as a legal requirement
There are some forms of business insurance which you must, by law, have in place before you will be able to trade. These are:
- Employer's liability insurance
If you employ staff, you are legally required to insure them against injuries, disease or death which arises as a result of their employment. Cover is required for a minimum of £5 million, and you must display a certificate of insurance at your place of work. Statutory inspection for certain itens of equipment such as lifts, fork lifts and pressure vessels.
Other types of insurance
Although things like fire and theft, or damage to people and property are the risks that immediately spring to mind when considering insurance, there are some other factors you should also take into consideration. For instance:
- Business interruption
If fire destroys your property or equipment, your immediate concern will be the cost of replacing them. It's important too, however, to take into account the loss of business you'll suffer while repairs are being carried out, and, depending on the severity of the damage, this cost could be a considerable one. Business interruption cover will help minimise your loss and is any essential part of any business insurance policy.
Even if you are able to continue trading after an accident, you may find that you can only do so at an increased cost – renting temporary premises, hiring temporary members of staff, etc. This cover will help cover any additional expenses you find yourself having to meet, helping your business stay on its feet even in difficult circumstances.
- Professional indemnity insurance
Being accused of professional negligence is a nightmare for any businessperson, and even if you're innocent of the negligence you're accused of, legal fees and loss of business whilst a case is being decided can still end up costing you a great deal of money. In some professions, such as accountancy, for example, professional indemnity insurance is a legal requirement: in others it may still prove to be a worthwhile investment.
- Property and Buildings insurance
One of the most important types of insurance you can buy, as without a property to work from, you'll quickly find yourself without a business to run.
- Contents insurance
This can cover everything from computer and telecommunications equipment (the loss of which could be a disaster in itself, depending on the extent to which your business depends on it), to any stock being held on your premises. Bear in mind that, should your place of business go up in flames, your stock will be destroyed along with the building, and without adequate insurance in place, you'll be out of pocket when it comes to replacing it.
Unlike large businesses, in which jobs can normally be covered by someone else if a member of staff becomes ill, or is otherwise unable to work, small businesses can be very vulnerable to the loss of key members of staff. Key man cover will help lessen the blow. Personal accident and loss of income cover can also be a good investment, particularly if you're a one-man band or very small business.
What to do in the event of an accident
Of course, everyone who purchases insurance does so in the hope that they'll never have to use it, and business owners are no exception. Should you find yourself in a position where you need to make a claim, however, you should make contact with your insurer as quickly as possible. They'll be able to give you advice on what to do next, and may wish to send someone out to the scene of the accident. Until you've spoken to them (and, of course, to the police), you should be careful not to move anything, although it's a good idea to take photographs of the scene of the accident. Above all, and as difficult as it may seem, try to remain calm: your insurance cover is in place for just this eventuality.
Stride Limited, UK business insurance brokers, can provide insurance for all your business needs.
Request a quote online or call 023 9224 8790.