If you are a small business owner, then you will likely be trying to find the right way to keep your business profitable. In some instances, you may be presented with opportunities that require a leap of faith and trusting your instincts.
Although some of these prospects seem exciting, just one wrong decision can potentially result in large financial losses. This is where small business insurance comes in. These types of insurance provide vital coverage for your business for those times when unexpected situations crop up. Here, we’ll take a look at everything you need to know about insurance for small businesses.
Insurance Policies You Need
When it comes to insurance policies, there is only one which you legally need. This is employers’ liability insurance, often referred to as EL or ELI. This insurance covers your business if an employee says that they have suffered illness or an injury due to working at your business. It then covers legal and compensation costs which will be involved in defending the case. If it’s found that you don’t have this, Health and Safety Executive (HSE) can fine you up to £2,500 for each day you were unprotected, which can quickly increase into hundreds of thousands of pounds if you’ve been uninsured for some time.
Insurance Policies You Should Consider
Whilst employers’ liability insurance is the only form of insurance which you are legally required to have, a lot of small business owners also choose to invest in other insurance policies in order to protect themselves against any unforeseen circumstances or financial loss.
Public Liability Insurance
Public Liability Insurance (PL) is a popular insurance choice for many different small businesses. This insurance covers you for claims made against you by members of the public. Accidents can happen, but if someone in your business causes injury or property damage to a member of the public, then you may soon find that you’re facing substantial legal fees and compensation costs. PL picks up the bill for this and keeps your business running smoothly.
Professional Indemnity Insurance
Professional Indemnity Insurance is important to have if your business provides advice or offers professional services to other businesses, or if you deal with intellectual property or sensitive client data. If you make a mistake in your work and the client loses money as a result and sues you, then this type of insurance can cover any compensation claims and costs. Some professional bodies, regulators and businesses may require you to have this in place before you begin working with one another.
Key Person Insurance
If your business is primarily headed by a few key persons, then you may also wish to take out key person insurance (also referred to as key man insurance). In every business, there are of course key persons who give their all and they may be responsible for a large amount of business that you get as a result of their hard work. Key person insurance protects you against a loss of profits in the event of death, or terminal/critical illness. You can use this insurance to pay back any overdrafts, loaned money or dividends accrued by said person. For key person insurance, you may want to seek the help of a business life insurance broker to help you find the best premium.