Depending on the nature of your business, you may need any number of different business insurance policies. The main three types of business insurance policies that many small business owners and start-ups opt for are public liability insurance, employers’ liability insurance (with minimum cover of £5m) and professional indemnity insurance. But of these three, many small businesses and start-ups only need public liability insurance if they neither have any employees nor offer professional advice and services.
There are several other types of business insurance policies available, though, and you should consider each in turn to decide whether or not your particular business requires them. These include:
- Business property insurance (to cover your business premises and equipment against fire, flood, theft etc.);
- Tools and plant cover;
- Revenue protection (through key person cover if your business relies on one or two peoples’ expertise or knowledge to exist, or business interruption service in case something happens that means you can’t trade for a limited period, e.g. after a fire).
Business insurance is ultimately very flexible in that you can pick and choose what types of cover you need and don’t have to pay for cover that isn’t necessary for your business. Some insurers offer a combined policy for different types of cover, meaning you only have to pay one excess even if you have to claim against several elements of the policy.
For example, if your business premises set on fire and damaged a neighbour’s property, you may need to claim under your business property insurance (to effect the necessary repairs to your premises), business interruption insurance (to pay your outgoings whilst you are unable to use your premises) and public liability insurance (to pay for the repairs to the neighbour’s property).
Of all the types of business insurance policies available to all businesses, perhaps the most crucial is public liability insurance. That’s because ultimately if your business suffers through theft, fire, flood or the death or illness of a key person, it is ‘only’ your business that will suffer – no-one is going to sue you for it, so you can contain your losses to your business. That is easy to say, of course, and most small business owners will have invested considerably in setting up, and if you have adequate insurance in place you won’t have to worry at all. But if you didn’t have adequate insurance and injured someone or caused damage to their property, they would sue you and you may end up losing more than your business – you could lose your home and any savings too.
Public liability cover is designed to cover levels of claim that you couldn’t possibly hope to pay for yourself. If, for example, a customer caught their coat on a nail sticking out of your wall, you could no doubt afford to pay for the coat to be repaired or replaced without needing to go through your insurance. Public liability insurance covers up to at least £1million but sometimes you may need a higher level of cover (particularly if your customers demand it).
Finally, if you take out public liability insurance, check the terms and conditions before you buy to make sure that no exclusions apply that would effectively mean that you could never claim. For example, you may find a relatively cheap quote but discover that it wouldn’t cover you if you were working at height at the time of any incident – not much use if you’re a commercial window cleaner.