Peace of mind
Any business faces a number of risks, many of which can be insured against. What you should prioritise depends on the nature of the firm and the type of work undertaken.
When setting up or running a business, it is essential you protect it from the various threats it may face, whether that be a penalty by an official body or legal action brought by a customer or supplier.
A whole industry has grown up around the provision of various insurance packages to enterprises, but the question many may be asking is: “Just which policies do I require?”
EMPLOYERS’ LIABILITY INSURANCE
If your business employs staff under contract of service or offers apprenticeships, it is a legal requirement to have employers’ liability insurance.
This protects your business against an employee making a claim for compensation for injury or illness in the event of an accident occurring in the workplace, whether on or off-site. A certificate as proof of insurance should be displayed prominently where employees can easily read it.
If you are running a family business, i.e. if all your employees are closely related to you but you are not incorporated as a limited company, you are exempt.
BUSINESS PREMISES INSURANCE
Just like a home, it is important that your business premises, be it owned or leased, is protected by property insurance.
This insurance is generally split into the following:
- Portable equipment
- Tools cover
- Stock cover
This covers against any loss or damage to your commercial business property in the event of fire, theft or other disaster.
Commercial vehicles should be fully insured to protect you against liability should an accident occur. Normally, vehicle insurance covers commercial vehicles and drivers for collision, liability, property damage and personal injury.
At the very least, businesses should insure against third-party injury; however, ‘comprehensive’ insurance will cover that vehicle in an accident as well and can sometimes cost the same or less than a third-party policy.
Where employees are using their own cars for business, their own personal insurance will cover them in the event of an accident, but they may wish to consider paying for a ‘business use’ policy for their own peace of mind.
PUBLIC LIABILITY INSURANCE
Public liability insurance covers businesses that interact with the general public or meet their customers face-to-face.
It also protects your business if you visit customers at their premises or you have premises where customers visit you and there’s a chance they could injure themselves, or where you could cause accidental damage to your customers’ or another person’s property.
The type of business and the work you undertake will command the level of cover you require. In addition, if you cause injury or damage to your customer or another party the likelihood is that you will be pursued by a solicitor for damages. This cover may also defend your position and pay compensation if required.
This protects your business against the failure of your customers to pay ‘trade debts’ owed to you. These debts can arise following a customer becoming insolvent or failing to pay within the agreed terms and conditions.
BUSINESS INTERRUPTION INSURANCE
This is designed to compensate a business against loss of income due to being unable to trade because of a disaster or catastrophic event.
This may be a fire, flood or major theft that leaves your staff unable to work on the premises, manufacture products or carry out trading activities. The insurance would help you carry on running your business in the interim.
FEE PROTECTION INSURANCE
Tax investigations can incur professional fees and costly business disruption. Fee protection insurance Can safeguard your business from the cost of those fees.
While businesses sometimes query the cost of insurance, particularly as it seems to increase year-on-year, it is vital they assess the impact that not having insurance could have on their prospects.
Sanjay Parmar is partner at Grunberg & Co
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