Tag Archives: Employers Liability Insurance

Insurance for Small Business Owners

When starting your own business, you more often than not have to start small and develop your business to match not only demand but also your ambition and ideas. When a business is small, every step towards protecting it and its assets matter, sometimes more so than when it’s big.

The first step any new, small business owner should look to take towards protecting his or her business is making sure all of its assets are insured. For some this may prove easier than others, but one way or another you have to be insured in case the unthinkable happens: severe malfunction, theft or any sort of natural disaster.

Each business insurance package will ultimately depend on the type of business you run, the assets you have and the duties involved on a day-to-day basis.

There are several insurance protection schemes that you can get for your business, which may in the long run save you quite a lot of money if the need to make a claim arises. A specific type of insurance some businesses may need is professional indemnity insurance. This type of insurance is there to make sure that if anything goes wrong with the service that you are providing with regards to advice given and legal action is taken against you, your legal fees will be covered amongst other things.

Naturally, in an ideal situation you would never need this kind of insurance, but if you do get sued and you don’t have it in place you may have to pay a lot of money in court fees, lawyer fees and perhaps compensation to any injured party as a result of your actions.

Other specific types of business insurance cover SME’s may need include employers liability insurance and public liability insurance.

5 Practical Points to Consider Before Buying Professional Indemnity Insurance

In the unfortunate situation of professional negligence or error, PI Insurance may well save your business. It is important to ensure that you obtain the most suitable form of cover in order to maximise protection. Before you buy, ask yourself the following questions:

Is my profession covered?
For some professions, the purchasing of PI Insurance is mandatory. These include Accountants, Solicitors and the Medical profession, amongst others. A definitive list of named professions can be found online. However, anyone can purchase Professional Indemnity Insurance, and an increasing number of professionals in a range of industries are choosing to do so on a voluntary basis. Even if PI is not essential to your profession, it may be advisable.

How much cover will I need?
This varies dramatically from case to case. When taking out a policy, you need to consider the size of your contract and client, any potential defence costs and the maximum amount of compensation which could be awarded against you. In general terms: the higher the financial stakes, the greater the amount of cover required. You can usually set your own limit of indemnity when taking out a policy, but bear in mind that you will often be required to pay an excess. It is also worth noting that some clients will have a minimum limit of indemnity that they require. Some government departments, for example, require contractors to have at least £5 million of cover.

Am I covered for work that I’ve done before I take the policy out?
The majority of PI policies work on a claims-made basis. This means that the insurance covers any claims which are made during the policy period, rather than the actual incidents themselves. However, some insurance providers will require you to pay for retroactive cover to ensure that you are protected against any issues with work completed before the instigation of the policy. Some policies will run for a set amount of time, whereas others will continue indefinitely until payment is actively cancelled.

Does it cover me internationally?
Again, this varies according to industry and to the insurance provider. Many insurance providers offer industry-specific policies to ensure the most relevant and tightest level of protection. Policies can be further tailored to the requirements of your individual business, and amended as your needs alter. The function of Professional Indemnity Insurance is to protect you against the worst eventuality. It is therefore vital that you select (and if necessary, create) a policy which extends to the level of cover you require.

How do I pay?
The most common form of payment for PI Insurance is by direct debit. This of course means that the insurance is usually an ongoing business expense, rather than a single lump sum. The benefit of this is that your policy will continue to run until you cancel payment, thus avoiding a situation where your policy has expired without your realising. There are other methods of payment which can again be arranged to suit your individual situation.

There is much scope for flexibility with Professional Indemnity Insurance. By asking yourself these questions, you should begin to develop an idea of the needs of your particular business. The purchasing of this type of insurance could make the difference between professional security and dissolution – it is therefore important that you capitalise on the protection available.

For further information regarding Professional Indemnity Insurance, Employers Liability Insurance or Public Liability Insurance, visit Hiscox, experts in Business Insurance.