Regardless of the size of your business, you should look into business insurance. Business insurance helps cover legal costs and minimises how much you pay on legal claims against your business.
If you're wondering if you need business insurance, consider the extra costs if a claim is made against your business.
The two main types of business insurance are public liability and employers' liability insurance.
You should have at least one of these insurance already, and you may find that depending on your business needs, you may need additional business insurance. On top of the two mentioned business insurance types, you may need other business insurance policies to cover other business areas.
In this article, you'll learn all about the different types of business insurance so you'll know which ones you should apply for.
The Different Types of Business Insurance
With insurance, there is no one-size-fits-all.
There are different business insurance policies you can apply for, but it all depends on the kind of business you have and if the insurance is beneficial to you. All companies need business insurance.
You may only need some of the insurances we mention next, but you should consider looking for insurance providers for the types that apply to your business. There are several types of business insurance you should consider for your business:
- Professional Indemnity insurance: Protects you against claims for damage or loss made by a third party due to negligent services or advice you've provided.
- Employers' Liability insurance: Covers the cost of a claim an employee makes when they've had an illness or injury caused by work due to an employer's negligence.
- Public Liability insurance: Covers claims from members of the public, clients and contractors concerning accidental injury or property damage caused by your business or business activities.
- Product Liability insurance: Protects you against claims for personal injuries caused by a faulty product from your business.
- Business Interruption insurance: Covers the lost income that businesses suffer from after a disaster.
- Business Contents insurance: Protects equipment stored in an office or other company premises in case of loss, damage or theft.
- Cyber Insurance: Protects businesses from internet-based risks, especially IT infrastructure and activities.
In the following section, we dive into the above types of business insurance a little deeper.
Professional Indemnity Insurance
Professional Indemnity insurance protects you against claims for damage or loss made by a third party due to negligent services or advice you've provided. This business insurance protects you against disgruntled customers.
If your business offers a service or advice to a client, there's a chance of errors that could cost them money. You should get Professional Indemnity insurance to cover any potential issues that may arise.
This business insurance policy is ideal for business owners, sole traders and self-employed individuals. You will benefit from the professional indemnity policy if you provide designs, advice, specifications or instructions for any more of your services.
Employers' Liability Insurance
Employers' Liability insurance covers the cost of an employee's claim when they've had an illness or injury caused by work due to an employer's negligence.
For example, if an injury has occurred on the business premises due to a piece of operating machinery that has poor maintenance or if there hasn't been protective gear provided, an employee can make a claim against the business.
Employers are responsible for the health and safety of their employees at work; if this is compromised, you could put your employees in danger, and the business could face a substantial monetary loss with a claim.
So, if you're a business with machinery or services that could harm your employees, you will need business insurance to cover the claim costs. Employers' Liability insurance is legally required for all businesses in the UK; you can be fined for every day you have the coverage necessary.
Employers' Liability insurance policy doesn't cover damage caused by management within a business. If a manager is in charge of health and safety, you can take out management liability insurance, which protects the individuals with management responsibilities in the business.
Public Liability Insurance
Public Liability insurance covers claims from members of the public, clients and contractors concerning accidental injury or property damage caused by your business or business activities.
You could be liable if a customer has caused any harm or property damage at your business premises. For example, if a client is visiting your office and you spill coffee on their laptop, they can claim against the business.
So, if your client contracts or the public comes to your business premises, you would benefit from Public Liability insurance to cover the cost of any potential damage.
Product Liability Insurance
Product Liability insurance protects you against claims for personal injuries caused by a faulty product from your business. If there is a quality control issue and a defective product is sent out to someone, and it causes loss of property or damage to property or person, they could claim against your business.
Getting Product Liability to cover damage and other legal costs associated with the claim would be a good idea if you sell physical products. Even if you haven't manufactured the product but have some form of association, your business could still be liable. Liability covers the cost of compensation claims and any legal fees involved.
Business Interruption Insurance
Business Interruption insurance covers the lost income that businesses suffer from after a disaster. If a fire, flood, natural disaster, or any other unforeseen circumstances affect your business premises and put your business out of work for a while, Business Interruption insurance would cover income lost.
Business insurance covers your business if you're forced to close a business premises or covers the cost of rebuilding premises if there are damages after the disaster.
Business Contents Insurance
Business Content insurance, sometimes known as business buildings insurance, is a commercial cover that protects equipment stored in an office or other separate business premises in the event of loss, damage or theft.
Business Contents insurance is known as an all-risks policy. It covers physical damage or loss of company property, including inside contents. If your business works out of an office or a shop, getting business insurance to cover any loss or damages is a good idea.
Cyber Insurance
Cyber Insurance is an insurance policy that protects businesses from internet-based risks, especially risks relating to IT infrastructure and activities. Cyber insurance covers the losses or damage of data and information through data breaches.
The policy covers the cost of technique procedures to recover lost data, business interruptions, repair of damaged equipment and the cost of any issues caused by notifying affected customers of client data loss.
If you're an online business, consider Cyber Insurance if you handle client data.
How Much Does Business Insurance Cover?
You can't predict the future; you'll unlikely know if there ever will be a claim against your business, but everyday risks could be why you need insurance. Business insurance can make an expensive claim relatively low cost.
Business insurance covers the following costs:
- Legal fees: Insurance covers legal action on both your and the claiming person's sides, including professional advice.
- Compensation costs: The insurance covers the cost of the claim itself. The amount you'll pay or that's covered depends on how much insurance you take out.
- Financial loss: Financial protection for both you and the person claiming. The insurance provider will cover any income losses.
- Premises Damage: Any damage to the business or client premises will be covered, too.
How much coverage you get from your insurance will depend on the insurance providers you choose to use. Most businesses will need some form of business insurance. If you don’t get insurance, your business could lose money through claims and even into potential debt. Having coverage will help minimise the impact of claims against your business.
Final Thoughts on Business Insurance
If you want to protect your business from the impact of potential claims, consider business insurance to cover the payout of claims and any legal fees involved. Before choosing the first insurance provider you find, always compare business insurance providers to find the one most suitable for your business needs.
If you take at least one thing away from this article, you need Employers' Liability insurance.
