Ensuring you and your business are protected by relevant insurance policies is an essential step for any entrepreneur or startup founder.
- Businesses with staff are legally obliged to have Employers Liability Insurance
- Personal insurance may not cover your home or car if used for business purposes
- Owners can be held personally liable for business claims in some cases
This short guide lays out some of the insurance options available to those setting up small businesses and startups.
Insurance policies for businesses can cover a wide range of risks such as loss, damage or theft of equipment and stock, employee fraud and property damage. They can also offer protection against claims made against you or your business.
Business owners may be obliged by law to take out some forms of insurance, for example if they employ other people. Some regulatory bodies also require members to have certain types of cover.
Of course every business is different and you’ll need to carry out your own independent research before deciding what is right for you.
Key questions to ask yourself before getting covered
- Do I have employees or am I likely to employ anyone soon?
- Will I be mainly working from home?
- Am I selling a product or a service?
- Will people visit my premises?
- Do any existing insurance policies already provide the right type of cover?
Here are some of the main types of insurance cover to consider when setting up a business.
Employers Liability insurance
If you have employees, or are planning to, you are legally required to have Employers Liability insurance. It will cover any legal and compensation costs involved in defending a case brought by an employee claiming they suffered illness or injury as a result of working for the business. You can incur hefty fines from the Health and Safety Executive if you do not have the right policy in place.
Product liability insurance
This applies if your business manufactures or supplies goods or if you are part of a supply line. It covers your business if your product causes damages to property or personal injury. This includes any product your company designed, manufactured, supplied or sold.
Professional indemnity insurance
Professional indemnity insurance is there to protect your business if a client alleges that there are faults in your work. It covers against infringing copyright, negligence, breach of confidential information or data, and poor advice that results in your client losing money.
Building and contents insurance
Many new businesses start at the kitchen table, but even if you are primarily, or completely, working from home it is a good idea to examine the details of your home insurance policy as it may not include business activities, especially if they extend beyond desk-based ‘clerical’ work. If you are renting premises then check what cover is in place.
Commercial motor insurance
Your personal motor insurance may not cover your vehicle to be used for business purposes, and if your business uses other vehicles then you’re very likely to need commercial motor insurance.
Cyber liability insurance
As the risk from cyber crime continues to rise year-on-year it may be prudent for your startup to consider cyber liability cover. Policies can cover such things as data breaches and cyber-attacks – as well as the legal and compensation claims resulting from them.
Public liability insurance
If you are likely to have visitors to your work premises or carry out work on client sites, public liability protection should be considered. It can cover legal expenses or compensation claims if clients, suppliers or members of the public suffer injury or property damage.
Directors’ and officers’ liability insurance
A business founder or director can, in some instances, be personally sued for breaching health and safety laws, misadministration of the company pension or errors in financial reporting. Directors’ and officers’ liability cover can protect the individuals who have management responsibility in the business.