Urgh… yes, we know, we know! Possibly the most boooooring topic in the world… until you realise you need it of course. Grab a cuppa and a slice of cake…we’re going to talk business insurance!
Ok, so here’s the thing…If you’re becoming self-employed or starting a small business you need to consider what insurance(s) you might need or want to have insurance in place. You might not need any, but if you do, it’s always better to be safe than sorry. This applies to you even if you’re working from home.
Why do I need insurance?
How much do you spend on equipment for your business (including the bits you keep secret!)? We’re willing to bet it’s a fair amount. Now think about how much it would cost you to replace everything if it got lost, stolen or damaged.
Rather than an expense you could definitely do without, consider business insurance as protection for you and your business. Depending on what policies you have it can provide compensation to anyone hurt, injured, or misadvised by your business, and will protect your business if someone starts legal action against you – plus it could compensate you in the event of any disaster like fire or theft, or replace loss of earnings if you’re not able to work.
Are you a wedding cake maker or caterer? What if some one gets sick and blames you for food poisoning? Or chokes on a stuffed olive and gets all legal beagle about it? You need insurance.
Are you a business or marketing consultant? What if you give someone some advice and they loose money? Whether it was your fault or not they could take legal action to recover their losses from you. You need insurance too.
See what we mean?
Is business insurance compulsory?
Well that depends on what your business is and does…
If you employ anyone, even on a part-time basis you are required by law to have Employers Liability Insurance – and the fines for not complying are up to £2500 for each day that you’re not covered!
If you use a motor vehicle for business purposes, suitable motor insurance is also legally required.
Some insurances might also be required for membership to a professional organisation, or there may be a contractual obligation from someone you are doing some work for on a self-employed basis, or for the premises you are working from.
What types of business insurance are there?
If you use any vehicle specifically for business purposes then it’s a legal requirement to have insurance. If it’s just your own car that you’re using for self-employment then check your policy documents as business use may already be covered, and if not it can usually be added by most insurers with a quick phone call.
If you plan to do any work from home once self-employed you need to check your current contents insurance as this is likely to need amending or replacing to ensure that you’re fully covered. You might find that things like your computer are no longer covered on your contents insurance policy if you’re using it for business. It’s best to check, especially if you invest heavily in technology. Better safe than broke from having to replace stolen or damaged kit!
If you own your own home and carry out any business activities there your buildings insurance policy may no longer give you the cover you need so should be checked and replaced if necessary. If you rent your home you should inform your landlord of your intention to work from home as this may affect their own insurance policy. And get the relevant permission to do so (in writing) before you start. If you own your home and still have a mortgage then you should notify your mortgage provider in the same way.
Public Liability Insurance
This might be necessary if members of the public, customers or clients come to your place of work, or if you go to theirs – even if it’s to your home or their home. Although it’s not usually a legal requirement this is an important insurance cover to consider, as just one claim against you for damage or injury could wipe out your business, and even put your own assets at risk such as your house or car.
Products Liability Insurance
If you sell, manufacture or supply products you should consider product liability insurance to cover you for any damage or injury caused to others from the use of your product.
Professional Indemnity Insurance
If you’re offering professional advice or any sort of service which fails to meet a customer’s expectations, or causes any damage or financial loss, a claim of negligence could be made against you. Professional indemnity insurance could offer cover for any compensation you may need to pay out to correct a mistake or to cover any legal costs due to negligence.
Employers Liability Insurance
As an employer, you are responsible for the Health and Safety of your staff, including part-time staff or anyone doing short-term work for you. If you have an employee, you’ll need employers liability insurance – cover of at least £5 million is required by law and you can be fined by the Health & Safety Executive up to £2,500 for each day that you aren’t covered. There may be an exemption if you are the director of your own company or work from home and pay a spouse or child to do some work for you. Employer’s liability insurance can protect you and your business for any claims made by employees who have been injured at work, or experienced illness as a result of their work. It also covers legal expenses in cases against your business.
Business Interruption Insurance
Should the worst happen, business interruption insurance could cover some loss of earnings whilst you’re unable to trade. The value of having this insurance is going to depend entirely on the type of work you do, and your personal preference for being covered.
Where should I get a quote for business insurance?
You could try your bank or local insurance broker, but we’d suggest getting a range of quotes before buying.
Other things to note:
Always be honest with insurers from the start. There’s no point paying for a policy which might never pay out because you exaggerated the truth to get it cheaper!
Carrying out risk assessments may help you reduce some of your insurance premiums – this should show that you’ve considered the risk, how likely it is, the damage it could cause, any likely costs of compensating or rectifying a mistake.
It’s a good idea to scan-in and have a backup copy of receipts for items purchased in case you need to prove the purchase or their value for any insurance claim.
And, of course… never be afraid to haggle to help keep your business costs down. You’re a savvy business mum after all!