When setting up a business, it will not be too long before you consider what insurance policies you need in order to comply with the law and protect yourself from insurance claims that could threaten the existence of your business and possibly put you at the risk of ruinous personal losses. But there are very few hard and fast rules about what insurance policies you need to get so keep reading if you want to find out more.
Employers liability insurance is the only insurance-policy that companies are 100% legally required to procure if they have any employees. This covers the cost of damages and legal fees incurred if employees are injured or are made ill through the fault of the employer and is compulsory to ensure employees do not miss out on their rightful compensation. NHS costs can also be recouped. The minimum level of EL must be £5million, while most policies provide cover up to £10million. You must display an up to date certificate and can be fined up to £2,500 for every day you are not covered.
What type of company is your business?
There are a few situations where a company does not require EL: if it is not a limited company and you or your close family members are the only employees it is not essential and limited companies with a sole employee who owns at least 50% of it are also exempt. But in many cases these businesses do invest in a policy because the cost otherwise can be ruinous. If your business is not a limited company then you can be held liable for any damages, so insurance is even more critical.
If you own premises or work in close proximity to the public then you should definitely get public liability insurance. This covers and damage or loss suffered by a member of the public caused and will mean your insurer pays expenses, legal fees, damages and medical fees. Your premium will depend on the type of business you are, so construction companies can expect to pay more than a marketing company, while horse riding companies are required by law to be covered. If you sell or give away any physical items that causes damage or loss and is considered not ‘fit for purpose’, product liability will cover you. The normal amount of cover is £2million.
If it isn’t products you sell but, instead, your knowledge or skills you should find the best deal on professional indemnity insurance. PI protects you if a client makes a claim for a loss or damage that came about as a result of your negligence, and also covers legal costs of fighting the claim. There are a number of professions where PI is compulsory, including solicitors, accountants, architects, mortgage brokers, financial advisers and charters surveyors while most designers, PR agencies and advertising firms are covered too.
There are a number of industries which require their own special insurance policies – like commercial property owners should have Landlords-insurance – and it is best to seek the advice of a specialist federation or a broker specialising in business insurance.