Insurance: Which policies do you need to buy?

In the midst of your flourishing business ideas, exciting client meetings and ambitious future plans, making sure you have the right insurance is probably something that inadvertently slides down to the bottom of your ever-growing priority list. 

However, it is one of the most important aspects of setting up and sustaining your business. It’s easy to think that bad things happen to other people and that you will never be affected by unfortunate events but in reality, issues and incidents happen to the best of us. Usually when you least expect them.

With this in mind, it’s a good idea to start thinking about your worst case scenarios and making sure you are fully prepared for every eventuality. 

What insurance do you need?

Our advice is to start by establishing the minimum insurance cover you require and this will depend on the size of your business. To do this, you need to ask yourself the following questions:

• Do I have staff?
• Do I sell products?
• Do I operate machinery?
• Do I have business premises? 

If the answer is yes to any of the above, then read on…

Employers’ Liability Insurance

Let’s start with Employers’ Liability Insurance. There are just under 400 deaths and nearly 30,000 major injuries at work each year in the UK, so you need to be cautious. If you employ anyone, even if it’s your mother, the law clearly states you need Employers’ Liability Insurance. 

As an employer, you are responsible for the health and safety of your employees while they are at work. They could be injured or may become ill as a result of their work while in your employment. The end result is that they could try to claim compensation from you if they believe you are responsible. 

The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have a minimum level (currently £5m) of insurance cover against any such claims. It is however worth taking a good look at the type of risks and liabilities that you could face as it may be advisable to increase your insurance cover should the worse happen. 

Liability insurance basically covers business owners, independent professionals and self-employed people against the cost of compensation claims made by employees. You do also need to consider the cost of potential claims made against you by members of the public.

Product Liability Insurance

If your business involves you manufacturing, designing or selling products, you need to have Product Liability Insurance. Your latest range of soft toys may seem harmless to you, but you never know when that teddy bear could turn to the dark side! 

This type of insurance policy covers the cost of compensating anyone who is injured by a faulty product as your business could be held legally responsible for any injuries to people or damage to property caused by a faulty product. 

It’s worth noting that your business could be held liable for faulty products even if you didn’t manufacture them. If your business’s name is on the product or you repaired, refurbished or imported the product from outside the European Union you could still find yourself liable.

Continue reading on page two for find out what other insurance policies you need…

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