The majority of businesses will definitely require some sort of insurance policy even before starting up. The type of policy and the type of cover taken out will depend entirely on a number of factors, firstly the nature of the business, and secondly the everyday activities carried out by the business. Each business owner, director or employer, will have a differing legal responsibility towards their employees, customers and members of the public alike.
This guide outlines the cover options available with each type of business liability insurance and is intended to help you to understand what is required either when starting out and establishing a business for the first time or renewing your existing business insurance, and also what other types of insurance are available and may or may not be appropriate for your business.
The main purpose of any business insurance policy is to cover or protect the firm in situations where the firm could be held responsible for any of its actions. For example if an employee claims compensation, or your company accidentally causes severe damage to a customer's property. Only by ensuring that you have the suitable insurance cover will the insurer pay out up to the amount specified in the insurance policy.
Consequences of not being insured
If you decide not to take out an insurance policy and someone claims against you as an individual or in your role as a director then either you or your company may have to pay out extremely large amounts of money to settle the claim.
There are certain types of insurance that are compulsory for your business, a good example being employers' liability insurance.
You or your company or even both could be held legally liable and risk being sued either by an employee or a member of the public who is injured as a result of your negligence or duty of care.
This type of insurance also provides greater security to firms against costs which could otherwise result in financial difficulty and even closure of the business.
Always make sure you have the appropriate insurance cover in place for all your business' activities and risks.
Employers' Liability Insurance
As previously stated company owners and directors are legally responsible for the health and safety of each individual employee.
Any existing and previous employees could even try to claim compensation from you if they believe you are responsible for any incident that comes under a wide range of acts and directives that firms have to comply with. You should ensure that you have an appropriate level of cover in place to protect you and your business against any such claims.
This type of insurance will enable your insurer to meet the cost of compensation for any employees’ injuries or illness whether they are caused on or off site and even if those employees are no longer working for you and may have even retired.
The minimum amount that insurers will recommend is at least £5 million. However, this does not mean that that is a sufficient amount of cover and you should always look at each area of business risk and liabilities and decide on the appropriate amount of cover. Dependant on the size of the business then whilst insurers offer around £5 million as standard, most of them will offer to increase this to £10 million, and above.
You must make the certificate of employers liability insurance and your public liability insurance certificate available for inspection by staff and members of the public and it is always advisable to display these prominently in your place of work.
Public Liability Insurance
Public liability insurance is different from employers’ liability insurance as this is insurance that will cover you and your firm for any claims made against you by other businesses or a member of the public.
When working with the public and alongside other firms then you will find that many of your customers or potential customers will require proof that your firm has public liability insurance in place before they will even consider letting you to carry out any work for them or to work with them.
Another thing to consider when it comes to liability insurance is if you work from home and you might have customers or members of the public visiting you there, or even employ someone who works for you. If so then you may need to think about your liabilities and taking out some form of liability insurance.
Other Business Insurance
Products liability insurance protects you and your company against injury to your customers and damage to their property as a result of a product you sell or supply.
Property owners’ liability insurance
If you own a building or property and use this yourself or even rent this out to another company or a private tenant, you will need to purchase property owners insurance.
Professional indemnity insurance
Professional Indemnity Insurance in essence covers the advice you have given rather than the actions you have taken. This type of insurance is compulsory for most professional businesses and services. Failure by any firm to arrange the correct professional indemnity insurance will mean that they are exposed to all sorts of claims.
Directors and officers insurance
As a director, officer, or manager of a UK company, you are automatically exposed to unlimited personal liability. Directors and officers' insurance is designed to protect your personal finances if claims are brought against you.
Directors & officers insurance will protect you, covering legal fees and compensation, in the courts, and at tribunals.
Currently, employment practices claims constitute the largest area of activity under Directors and officers policies, with over 50% of all claims falling under employment practices. Other types of employers insurances:- Tradesman Insurance, Shop Insurance, Residential Landlord Insurance, Commercial Property Insurance, Office & Surgery Insurance, Business from Home Insurance, Hotel Insurance, Pub & Restaurant Insurance.
Commercial vehicle insurance, car fleet insurance, goods vehicle insurance, goods in transit insurance and many more.
So whether you are covering your property, machinery, vehicles, equipment, public liability or your employees, it's essential that you buy the right amount of cover with the option to increase cover limits, and or add on cover to suit your individual business and to meet any planned growth.