Welcome to our new six part blog series on business protection, covering everything from basic insurance and professional indemnities, to premiums and professional advice. Over the next six weeks we’ll tell you everything you need to know as a business owner about protecting what matters most.
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Adequate insurance is fundamentally important for a business. And in many cases, it is actually a legal obligation. What follows is a brief guide to the types of insurance a business must have and the types of insurance it might consider desirable.
Mandatory and optional
Essentially, business insurance falls into two categories: compulsory and optional.
There are three types of mandatory insurance. Any business that employs staff must have employers’ liability insurance. Any business that runs company cars or vehicles must have motor insurance. And any business that operates in certain professions, such as the law, must have professional indemnity insurance.
Of course, a business will also want to look at protecting itself with other, non-compulsory insurance. These might include cover for property, contents, equipment, interruption to business, goods kept in stock, goods in transit, money, loan repayments, public liability, product liability, partnership protection, health, critical illness and legal expenses.
All businesses that employ staff must take out employers’ liability insurance. This will provide cover against any claims that an employee makes for any injury or illness sustained while working for the business.
Any company that has vehicles that are used for business purposes will need to have motor insurance. The minimum requirement here is third-party insurance since that will cover personal injury to others and damage to property. Comprehensive insurance will additionally cover for any damage to or theft of the vehicles themselves. In those cases where the car or van is used for private as well as business purposes, the insurance must cover both.
Some businesses – lawyers, financial consultants – offer advice as part of their service, and they will require professional indemnity insurance. This will protect them against clients who bring an action against them on the basis that the advice offered was wrong or negligent. As well as being a mandatory requirement for legal, accountancy and financial firms, professional indemnity insurance is often taken out by other types of business such as management consultancies and designers.
Basic business insurance
Most businesses have physical assets that need to be insured in case of damage or loss. These include premises, stock, equipment, tools and even money.
Exactly what sort of general insurance a particular business requires will depend on the type of business it is, the extent and nature of its physical assets, and the level of risk it faces.
Next time, we’ll look at the various assets a business should look to insure in order to protect itself adequately.