0800 140 4644
When running a business, you find yourself at the front line for many problems. Not only are you the primary decision maker for where the business should go, but the concept of ‘the buck stops here’ ends up decisively at your feet.
With the future of the business and people’s livelihoods at risk (including your own), there is a need to insure your business to put the right safety barriers between you and any potential problems. To help, we’ve provided information about the types of work insurance to consider.
Types of Business Insurance
When people talk of business insurance, it’s really a catch-all term for four more specific business insurance products. While these are not all needed by all businesses, each is a good idea if it is relevant.
Employers’ Liability Insurance
The first thing to mention regarding employer’s liability insurance is that it is a legal requirement if you employ one or more people. Consequently, it’s the primary form of business insurance available.
Employer’s liability insurance (EL insurance) is there to provide financial cover for your employees should anything happen to them while in the workplace or undertaking activity for their work.
Its purpose is to cover legal costs and compensation in case of any illness or injury that occurs while your employee is working for you. As an employer, you have a legal duty of care to follow all relevant health and safety recommendations relevant to your business, but still, accidents can happen.
The breadth of situations employer’s liability insurance covers is significant, ranging from a trip or fall, to more complex cases such as a claim years later in retirement due to asbestos exposure during working years.
In the UK, failure to have EL insurance in place for a business with staff can result in a daily fine of up to £2,500.
Public Liability Insurance
Though it is not a legal requirement, public liability insurance (PL insurance) should be obtained by any business that interacts with the public.
Like employers’ liability insurance, PL insurance is there to cover the cost of legal support and any paid compensation that is required should a member of the public become injured or ill as a result of your business activity.
While it is obvious that a business with a direct dealing with the public, such as a restaurant or construction business, would require PL insurance, it is also advisable for many small businesses. Even if you work alone from a small office, you could find yourself in need of public liability insurance; a client who visits for a meeting and slips on the floor, for example, would be well within their rights to claim compensation from your business.
The compensation claim industry in the UK is vast, with many legal teams in place to press for the largest values of compensation should an injury occur. Without public liability insurance, these costs can spiral and be very damaging for a business.
Professional Indemnity Insurance
Covering a group of specialist insurances, professional indemnity insurance is designed to protect your business and its employees from any legal action brought against you due to matters relating to work you have done.
This can be quite wide-ranging, and it is important that your professional indemnity cover is specific for your industry.
Examples include:
- Providing cover for architects in case of complications due to their work;
- Protecting solicitors if advice given is poor;
- Insuring against complications arising after healthcare is provided;
- Covering graphic designers who mistakenly breach copyright;
- Protecting against loss of client data; and
- Providing legal support in slander or libel cases.
Professional indemnity insurance can be considered insurance against genuine mistakes that happen as part of your daily work and is very important for all businesses as they grow.
Product Indemnity Insurance
Sometimes placed under the same umbrella as professional indemnity, product indemnity insurance is specific for the manufacturing and retail industries and protects businesses from any problems that occur due to their products. This can include:
- Injury that comes about from product use;
- Damage to property due to the product;
- Products mistakenly breaching patents; and
- Costs of recalling products.
Product indemnity insurance is available for everyone in the product supply chain, from the original manufacturer, through to suppliers and end retailers. Often, a claim made against product indemnity can be quite complex, involving an original claim against a retailer passed back through the chain of supplier and manufacturer; for this reason, it is important that each link in that chain is properly protected.
Buildings Insurance
Buildings insurance is important for both business and personal life. If you or your business own a property, then it is important to get buildings insurance to cover the cost of any repairs to the property should it suffer damage.
If you rent your premises, make sure that your landlord has the relevant buildings insurance to keep you safe.
Contents Insurance
A subsection of building insurance, contents insurance is available to protect your possessions inside the building, and is important for any business with assets, from furniture to specialised equipment.
Note that standard contents insurance doesn’t typically cover retail stock or other specialised items and dedicated retail-based insurance is more suitable.
If you lease or rent a property to run your business, then you will still need to get your own contents insurance; any similar insurance in place by your landlord will protect their interests but is unlikely to cover yours.
Commercial Vehicle/Fleet Insurance
Being properly insured while on the road is a legal requirement in the UK, and if you have a fleet of vehicles for your business, it is important that you ensure all of them are correctly insured.
Business use insurance is wider ranging than typical personal insurance (called ‘social domestic and pleasure’). Standard business car insurance provides cover to visit multiple client or customer sites (not covered in personal insurance), while higher levels of business cover are required if you use your vehicle as part of your business, such as a taxi or ice-cream van.
Vehicle contents cover could also be required, to protect third-party items (such as parcels in a delivery van) or your own contents (tools left in the vehicle overnight, for example).
Retail Insurance
There are a range of additional specialist insurance products for those in the retail industry. If you run a shop, whether online or in a physical location, then your additional needs can be catered for by insurers.
Specialised retail insurance includes:
Tenants Improvement Insurance
Any installed furniture and equipment that you have installed into your shop will not be covered under the landlord’s building insurance. Shelving, refrigeration equipment, lighting and air conditioning, for example, should all be insured directly through tenant’s improvement insurance.
Note that this is in addition to your own contents insurance and covers items that become fixtures in the property rather than moveable assets.
Online Stock Insurance
Running a shop online requires you to holdstock. Specialist online stock insurance exists to bring premiums down and make sure you have the right level of cover that is tailored to your business. As stock is often changing, it requires a comprehensive bespoke cover from the insurer and you shouldn’t rely on something less specialised, such as contents insurance.
Life Insurance
Protecting your business is one side of insurance but protecting yourself and your family is another important part. Life insurance is a key product for you to make sure that those you leave behind are not left in financial difficulties. Like other insurance products, life insurance has multiple forms and choosing the right level of insurance based on your situation is important.
Your age and health are key factors for calculating the cost of your life insurance and for this reason, it is advisable to take out cover sooner rather than later.
Key Person Insurance
Sometimes called ‘key worker insurance’, this is a business subset of life insurance used when one or more employees of the business are critical to business continuity. Unlike a personal life insurance policy which is paid for by the individual with their family listed as the beneficiaries, key person insurance is paid for by the business, with the business receiving the full pay-out should death occur.
Key person insurance is important in businesses where one or more members of the business would cause a significant financial downturn if they were to pass away.
Typically, key person insurance is a level term life insurance variant, available only to businesses, though whole-of-life versions do exist.
Income Protection Insurance
Income protection (IP) insurance is a cover designed to provide you with an income if you find yourself temporarily unable to work through illness or, in some cases, redundancy.
While income protection is useful for any employee who would struggle with standard Statutory Sick Pay, it is of particular interest to self-employed workers who would be left without any income at all should they become too ill to work.
While income protection doesn’t offer a full salary replacement (often capped at 65%), its tax-free nature can mean it is more than suitable to see you through a difficult patch.
If you are self-employed, consider income protection as part of your comprehensive business finance package.
Mortgage Payment Protection Insurance
Mortgage payment protection insurance (MPPI) is a subset of income protection that is designed to cover your mortgage payments only, should you be unable to work. Its limited use means premiums are often cheaper than full income protection, and it is worth considering if your budget is tight.
Critical Illness Cover
Typically sold alongside life insurance, critical illness cover (CIC) pays out a lump sum if you suffer an illness or injury sufficient to prevent you from ever returning to work. Examples of situations that can be covered by CIC include:
- Terminal cancer;
- Full body paralysis;
- Multiple sclerosis;
- Heart attack; and
- Loss of limbs.
Critical illness cover differs between insurance providers, each having their own specific list of conditions that are considered legitimate. Additionally, the criteria by which CIC is paid out can depend on your work and whether the injury sustained prevents you from continuing to earn.
Critical illness payments can also help pay for private treatments to help you recover. They are typically large multiples of your annual salary, designed to help settle all your financial responsibilities and ensure a comfortable life.
Fee Protection Insurance
As accountants we also offer the specialised fee protection insurance. This is a level of business cover designed to ensure you are not left paying for additional accountancy services if your business is ever the subject of an investigation by HMRC.
Without fee protection insurance, the cost of such an investigation – even if you have done nothing wrong – can be significant. This simple business insurance will make sure that any intervention by HMRC doesn’t come with unwanted fees.
Speak to us at Black and White Accounting to get your fee protection insurance put in place.
Insurance and the Coronavirus
We appreciate even more than ever you need to be careful with all your spend. However, it could be a good opportunity to review what you have cover on and what you don’t. Like a lot of things in life, checking you have the right coverage and are paying the price for your insurance policies can remain at the bottom of your to do list throughout the year and is likely to only become more urgent if something happens and often, when things are too late.
Support from Black and White Accounting
We work closely with Financial Planners and Insurance Brokers, who are part of our Strategic Partner team, to ensure you have the right amount of insurance to ensure you are getting value for money, but also so you can sleep at night.
We want to make sure all of our clients are able to go about their business without worrying about any financial or legal issues. We can also help them understand what is tax deductible on their business and what isn’t.
If you want to talk this through with someone today, we’d love to hear from you and your Business Partners. Email us, complete the ‘Got a Question’ form on the right hand side, or call us today on 0800 140 4644.
