What types of business insurance are there?
Employers liability insurance
This protects your business against claims from employees.
It’s a legal requirement for most businesses with employees, and being found without it carries a hefty fine. It's designed to help you cover compensation payouts, legal fees and medical expenses your business is found liable for. This could be for things like injuries your employees suffer or damage done to their property while at work.
Public liability insurance
This protects your business against claims made by members of the public.
This could be for injuries they suffer, illnesses they contract or damage done to their property by your business. It isn’t a legal requirement, but it can help you cover the cost of compensation, legal fees and medical expenses you’re ordered to pay if your business is sued. And as these can soon add up, it can be worthwhile to have in place.
Professional indemnity insurance
This protects your business against claims of negligence or misconduct made by clients.
This could be for things like poor advice you give that causes them financial harm, or work you do that they claim isn’t as promised. They could even claim for reputational harm your work has caused them. It’s not a legal requirement, but some regulators and trade bodies will insist you have it in place in order to trade.
Do I need business insurance?
The only type of business insurance you legally have to have is employers’ liability insurance.
And you only need this if your business actually has employees.
Even then, there are exceptions.
But even if you don’t strictly need it, there are a number of good reasons to get business insurance:
It can help if you’re sued: If a customer, employee or client claims against your business, you could end up owing huge sums of money. The main point of business insurance is to help you cover any legal fees or compensation you’re ordered to pay.
Your regulator or trade body might insist on it: You may have to have certain types of cover in place in order to trade. This is the case for solicitors, lawyers and some tradespeople, all of whom are required by their regulator to have insurance as a condition of membership.
Contracts might ask for it: Some clients, especially councils and other official bodies, might need you to have insurance in place before they can work with you. Even private clients might want to make sure you’re covered before they hire you.
It gives you peace of mind: Knowing you’re covered if your business is sued can take some of the stress out of running a business, allowing you to focus on the important things like making it as successful as possible.
How could insurance benefit my business?
Business insurance can benefit a range of businesses in different ways. Here’s a few examples of how it might help your business.
Hairdressers, plumbers, window cleaners: they all come into contact with the public. And if your business causes them harm you could be left with a hefty legal bill. Reactions to hair dye, injuries suffered by left-out tools: these can all leave your business vulnerable to a claim. Having insurance in place can help ensure you can cover the costs if those claims are successful.
Whether you own a corner shop, bakery, tech shop or something else entirely, customers will be on your premises. You might have employees working for you too. If any of them slips on a wet floor, trips over a loose wire or is hit by falling stock, your business could be sued, leaving you with a hefty legal bill, medical expenses and compensation to pay. The right insurance can help you cover it.
Accidents happen, especially if you work with tools. Passersby tripping over loose debris, or an employee injuring themselves on the job could leave your business liable for damages. The right insurance can help make sure that accidents aren’t the end of your business. Some policies can even help you cover the cost of your tools and other equipment if they’re stolen, damaged or lost.
Are you a software engineer? A marketing consultant? Investment advisor? If your business does financial harm to a client, you could be held liable for damages. Whether you accidentally give bad advice, produce work your client is unhappy with or lose a sensitive document, your business could be sued. Having the right insurance in place can help safeguard it.
The scenarios above are for illustrative purposes only, and you should always check your policy documents to see exactly what you’re covered for.
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Need more help with business insurance?
If you work from home, business insurance could help you by:
Protecting you against negligence claims: If you do online work, and make an error in that work that causes your client financial harm, you could be sued. Professional indemnity insurance could help you cover the cost of any claims made against you.
Protecting you against injury claims: If you create products, and those products hurt a client, you could be held liable. Product liability insurance, which is usually included with public liability insurance, can help cover the cost of any claims made against you for personal injury or property damage.
Protecting you against employee claims: Even if your employees work from home, repetitive strain injuries can happen. If they’re found to be a result of the equipment you supplied your employees with, you could be held responsible. Having cover in place can help you cover the cost of such claims.