Business Insurance provider Superscript provide a comprehensive guide to everything you need to know about business insurance. Find out more about Superscript here.
Business insurance is an umbrella term that covers a range of different products to cover risks associated with running a business. Let's explore some of the most popular covers below:
Public liability insurance concerns risks associated with your business's interaction with members of the public (in this context meaning anyone who isn't an employee of your business). It covers legal fees and compensation costs associated with claims involving injury or property damage to a third party, while carrying out your business's work. Most businesses opt for this cover as it's rare that a business has zero interaction with people. It's also sometimes required by clients, offices, events (e.g. trade shows, fairs) etc.
The only type of business insurance which can be a legal requirement in the UK is employers' liability insurance. It is only a requirement for businesses with employees. However, it’s worth noting that an employee in this context covers a range of situations including full-time, part-time, temporary and even unpaid interns. Not having it in place can result in a fine of up to £2,500 per day for each uninsured day, so if you’re going to forgo it, it’s definitely worth making 100% sure that you don’t need it! It covers legal fees and compensation costs associated with an employee being injured or their property damaged while at work.
Professional indemnity insurance is a cover taken out by businesses that work in a contractual format either with other businesses or non-business clients. Broadly speaking, it covers the risks associated with alleged failure to meet your contractual obligations. For example, if you were accused of failing to meet a deadline, causing a client to lose money and resulting in you being taken to court, professional indemnity insurance may cover any associated legal fees and compensation costs.
Business contents insurance is quite straightforward and is comparable to home contents insurance, but for your business contents. It’s also referred to as contents and equipment insurance. Many businesses choose this cover as the cost of replacing computers and general equipment can add up pretty quickly.
Directors’ and officers’ insurance, also known in its short form, D&O, and as management liability insurance, is relevant to limited companies and partnerships. It is not needed by sole traders. It covers the personal assets of company directors and officers in the event that they are sued by other parties (e.g. employees, other companies, customers, clients) for alleged mismanagement of the business. This is a particularly important cover for startups seeking VC funding, as it is often required by VCs.
A cover that many businesses think won’t be useful for them, but actually often is! Cyber insurance provides cover for risks associated with holding personal data and your business’s general dependence on computer systems. Things like accidental or malicious data breaches, business interruption caused by downtime are real threats to the majority of modern businesses, so it’s definitely worth checking out whether cyber insurance is for you. For more information and examples of the risks covered by different types of business insurance, read more examples from Superscript here.
Whether you’re legally required to have it (i.e. employers’ liability, if you’re an employer), are a member of a trade association which requires it, or you simply don’t want to take the risk of being landed with an expensive and potentially ruinous claim against your business, there are a multitude of reasons for buying business insurance.
This depends on the nature of your business and the risks you face. If you have employees, employers’ liability is a must. Other things to take into consideration are whether you’re part of a trade association or professional body that requires you to have cover, or whether your clients typically require it.
Business insurance by and large is not a legal requirement in the UK. The exception to this is employers’ liability insurance which is a legal requirement for any business with employees, whether full-time, part-time, temporary or even unpaid.
Apart from not having employers’ liability insurance if you’re required to have it, which could land you with a fine of up to £2,500 for every uninsured day, quite simply, if something were to happen and you weren’t insured for it, you’d have to pay the full costs associated with it.
1. Carry out a risk assessment to determine what risks your business faces.
2. Do your research - see what other businesses in your industry typically get in terms of cover.
3. Check reviews. It’s all very well having cover, but it’s not a good sign if customers are generally unhappy with the insurance provider!
4. Read the small print. Once you’ve bought your cover, by law you have a 14-day cooling off period during which you can cancel your cover for any reason, so be sure to use this time to read and reread everything to make sure you have the cover you need.
5. If you’re not sure about something, ask! It’s better to be safe than sorry.
6. Once you’ve bought your cover and are happy with it, make sure you review it every so often (annually may not be often enough). If you get new employees, bigger contracts etc., it’s a good idea to check that you still have the right level of coverage.
Explore business insurance providers...