Let’s talk insurance!
Do you need insurance for your business? Of course you do! You don’t need insurance if you are just testing your idea but once you start trading you do! Otherwise it would be like buying a house without an insurance policy. Would you do that? Of course not!
There are a lot of other ways to save money but don’t try to save money when it comes to insurance! You are also required by law to have some insurances!
There are a lot of different type of insurance depending on your business. I will not go through every type of insurance but I will give you an idea about the most common.
1. Public liability insurance
– It is essential to have Public liability insurance if you interact with the general public or you meet clients face to face (which is most companies).
– It provides cover if you or your employees accidentally injure a member of the public or damage their property.
– The levels of cover can vary, generally between £1 million and £10 million.
– Your clients might request you to have certain levels of insurance before they enter into a contract.
– Alternatively, you will need to assess the risks and decide on a level of cover yourself. If you are unsure, discuss with the insurance brokers and they will be able to advice on a level of cover most common in your industry.
2. Product liability insurance
– Pretty much the same as public liability except it covers you if the damage is caused by a product you supplied, installed, maintained or manufactured.
– Don’t confuse it with a warranty cover! It doesn’t cover you if your product isn’t working anymore, only if the product has caused damage or injury.
You can also combine Public and Product liability insurance. It might be cheaper if you buy both.
3. Employer’s liability insurance
– It is required by law!
– Covers your employees if they have an accident or get sick whilst working for you.
– Be careful when you classify people as working for you. If they do work for you even if they are not officially employees, they might still classify as employees for these purposes.
– There are substantial fines if you are to be found without insurance when you should!
– If you are unsure, check with a professional or better yet, just get it!
4. Professional liability insurance
– Also called indemnity insurance, will protect your business if you are taken to court for negligence. Sometimes that happens even if you haven’t made a mistake. Say you are hired as a consultant to suggest measures to reduce costs. You’ve done the work and advised your client to implement certain measures/procedures/controls. Your client is not implementing the recommended measures hence not reducing any costs and takes you to court. Have you done anything wrong? Of course not!
– As I have done a lot of consultancy work over the years myself, I strongly urge you to have the scope of work in writing, signed by both parties. When you deliver your report, same process, make sure your client signs he/she understands and agrees.
– You should have a professional liability insurance if you are providing professional services or give advice to clients eg accountants, architects, engineers, IT contractors, management consultants etc.
– Most of the times your client will ask for an insurance before entering into a contract.
5. Trade credit insurance/Bad debt protection insurance
If you give credit to your clients (say 14, 30, 60 day etc payment terms) what happens when they are not paying you? Or they go into liquidation? You will end up most likely losing the money which could have a massive impact on your business. You might end up going into liquidation yourself as a result.
As a start-up business, you will most likely have no choice but to give your customers credit to attract them.
Having a credit insurance in place will protect you from non-payment or insolvency. You can include your entire ledger, key customers, specific customers, overseas customers and so on, it’s totally up to you. You can even protect just one high risk customer.
6. Cyber and data risk insurance
– It is the age of technology right? Do you have everything saved on your computer like me? What happens if you are subject to hacking, theft or phishing attacks?
– This type of insurance covers everything from extortion, data theft, hacking and phishing.
– You will need it if you hold sensitive customer data, are reliant on computer systems, have a website, are subject to a payment card industry merchant service agreement.
7. Office contents insurance
– Will cover your business equipment in case it’s accidentally damaged, stolen or lost. It includes office furniture, electrics, documents, items on the move like laptops, mobile phones, tablets etc.
Other types of insurance:
– Directors and Officers Liability Insurance
– Buildings Insurance
– Tradesman & Construction Insurance
– Shop & Retail Insurance
– Motor Trade Insurance
– Working from Home Insurance
– Manufacturing Insurance
– Hotel & Leisure Insurance
– Transport, Haulage & Fleet Insurance
– Pub & Restaurant Insurance
– And so on…
There are many types of insurances depending on your business. I advise you to think about your business and the risks you might be facing and discuss with a few insurance brokers. They should be able to advice and design a package for you to include all the relevant insurances. That’s right, you don’t need to buy one by one!
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