Is your small business insured correctly?

Dec 6, 2013   //   by Keith McDonald   //   Guest Post, Insurance  //  Comments Off on Is your small business insured correctly?


How much do you know about the specific insurance requirements for your business? Ashley Curtis tells us more about the liabilities that employers face and why finding the correct insurance package is an important step. 

As a small business owner, acquiring the correct insurance for your business needs to be one of your top priorities; not least because one type of insurance is a legal requirement in the UK. However depending on the type of industry your business resides in, it might not be necessary to acquire every type of policy under the sun.

Admittedly, this can lead to some confusion amongst small business owners and their insurance policies. I often hear entrepreneurs boasting about the deal they got on their professional indemnity insurance when they didn’t need that particular coverage in the first place!

Consequently, it’s worth going through any existing policies and asking yourself, “Is my small business insured correctly?”

Employers’ liability

If your business has one or more employees, it is a legal requirement to have employers’ liability insurance. This is not optional; it is mandatory to own this type of insurance if you have employees under your wing. Crucially, you could be subject to a £2,500 fine for each day you do not have this form of insurance.

Employees can become injured at work or fall ill as a result of working for you and, as a result, they might be entitled to claim compensation. Employers’ liability insurance covers any damages that may arise from their claim.

However, there is an exception to this rule: immediate members of your family who work for you do not count as employees for employers’ liability insurance. In this instance, recruiting your brother for part-time work as the only ’employee’ of your business means employers’ liability insurance is not mandatory.

Professional indemnity

Professional indemnity insurance is an integral type of cover for many businesses but not all. If your business gives advice or offers a professional service to others (which could result in negligence or mistakes causing a client’s business to lose money), professional indemnity insurance is recommended.

Unlike employers’ liability insurance, professional indemnity insurance is not a legal requirement and clearly it is not required for all types of businesses. The types of businesses that usually take out this form of cover include financial advisors, business consultants, journalists and accountants.

Public liability

Public liability insurance is one of the most common forms of small business insurance but, again, it is not applicable to all. If a customer or member of the public suffered a loss, injury or damage to property as a result of your business, that person could make a legal claim for compensation. Public liability insurance ensures that any compensation payments and legal expenses are covered.

It’s an essential form of cover for most types of business because, as many firms are customer-facing, there is always a chance of an accident happening to a customer. In addition, any business that has visitors to its premises or involves work on client sites needs public liability insurance.

These are three of the biggest types of insurance that smaller businesses need to consider. There’s no reason for businesses to be paying for cover they don’t need and, more importantly, businesses need to double check they are paying for the type of cover they do need. If not, entrepreneurs could be in for a rude shock when they go to make a claim against their supposed coverage.


About the author: Ashley graduated from the University of Portsmouth in 2010, before moving into brand journalism within the finance sector. He nows create awareness across the industry of the benefits and requirements of insurance for all forms of business.

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