Businesses, regardless of how small, are never without their different sets of risks. Some we plan for, some we don’t. And regardless of the magnitude of a risk, if ever allowed to come to pass, it could ruin a business, or at the very least inflict some severe damages. Having business insurance, however, helps to ensure that these risks – even if they ever come to pass – are mitigated. Just as a funeral plan is important to an aged man, a financial backup plan, like insurance, is also essential for a business. Having business insurance in place does not only ensure that you can carry on your daily operations, but it also helps stop bailiffs coming to you by preventing your business from running into debt.
Is it a legal requirement?
Many small-scale business owners may argue that having business insurance isn’t an absolute necessity. But this is far from being true. In fact, under UK law, so long as you have staff, it will be expected of you to have the employers’ liability insurance policy. That being said, some businesses, as well as associations, may require that participating businesses and members have business insurance. A typical example of this is the Institute of Chartered Accountants in Wales and England which mandates that members must have professional indemnity insurance before practising.
The potential consequence of not having business insurance
Although at the start of a business, every business owner would prefer to shop around, compare loans, the source for funds, and devise plans to turn their ideas into realities instead of boarding the insurance train to choose an insurance package for their business. While this act is a common practice, it is one of the reasons why many entrepreneurs end up seeking debt help Scotland after running their businesses into debt since they didn’t have a financial backup to fall on. The biggest damage a business owner could do to their business is not setting up a business insurance policy.
Types of business insurance available
In the light that business insurance can protect your business from accidents, theft, errors, and unforeseen circumstances, here are some of the major types of business insurance policies available on the insurance market:
Public liability insurance
How would you feel if someone (says a member of the public) walks into your business premises and gets hurt, and then puts the whole blame on you? Well, whether you like it or not, in such a scenario, you are going to have to deal with settling the claim of the victim alone except if you have public liability insurance in place. Public liability insurance will help you settle the entire compensation leaving you only to cater for the excess if there is any excess at all. On the bright side, public liability insurance also works for businesses that visit clients – like housekeeping, office cleaning, and outsourcing firms.
Employers’ liability insurance
Typically, every business in the UK – that makes use of employees – is expected to have the employers’ liability insurance. Failure to comply with this law could result in a fine worth ₤2,500 every day you don’t have it. This type of insurance is quite important in a business environment, as it helps cover for employees’ claims about being ill or injured while working for you.
Professional indemnity insurance
Are you a service-delivering business? Do you grant consultations, as well as professional advice to clients? Or maybe you deal in the delivery of any professional service whatsoever? Professional indemnity insurance is one you’ve got to obtain if you fall into any of the categories mentioned above. This type of insurance covers you in case you ever make a mistake in your line of work which leads to a financial or professional loss for your clients. Professional indemnity insurance also comes in handy in the event of an unintentional breach of confidentiality, infringement, unintentional copyright, defamation, or loss of documents.
Product liability insurance
For businesses that deal with the design, manufacture, production, or selling of products, product liability insurance is one to have. With this type of insurance, your business will be covered from being liable for accidents, death, or injuries resulting from the use of your products.
Business contents insurance
Have you ever envisaged a scenario whereby your business equipment gets stolen or damaged on-site? What would you do in such situations? Pack up and close for the day? Lock up your business till your equipment are back and running again? Far from it! This is exactly what business contents insurance protects you against. It helps you get back on your feet in the event of stolen, lost, or damaged equipment.
Conclusively, there are other relevant types of business insurance, including personal accident insurance, stock insurance, business interruption insurance, and lots more.