Business Insurance for the Self-Employed

   

Small businesses in the UK are on the rise. The motivation to start a new business and go it alone may stem from a variety of reasons such as fulfilling a dream, accommodating a change in family circumstances, a desire to take charge of the future, a redundancy... the reasons are endless. Easy access to the internet and the growing popularity of doing business online has further driven growth in a variety of sectors.

If you’re not too sure about what insurance policies you should take out to cover you and your business, this guide produced by Coverzones.com, one of the UK’s leading small business insurance comparison sites will help you.

Why insuring your business is good business

Each new venture may or may not require external financial investment however, along with a good business plan, making sure you have the right level of business insurance is imperative.

Every business has inherent risks, and business insurance plays a key role in risk management. Contrary to what many believe, business insurance is not the sole preserve of large corporations. From running a home internet business, to making clothes alterations, gardening or paranormal investigations, if you enter a commercial relationship with a third party, your legal status is equal to the Microsofts and L’Oreals of this world.

One mistake could sink a small business

Smaller businesses are particularly vulnerable to a wide range of risks and the costs of dealing with these unforeseen problems can quickly cripple a small operation.

If an employee is injured while at work, or a member of the public slips and falls on your premises, or if you simply make a mistake when providing a client with advice, the resulting bill for damages and legal costs could be more than enough to close down a small business.

Many, if not all, small business owners plough their life’s savings into their new venture and for this reason alone would benefit from the security that business insurance can bring. It is worth remembering that in the majority of instances, personal and home insurance policies will not cover your business activities.

Business insurance can keep you in business

There are other reasons why insuring your small business properly makes a lot of commercial sense:
Some banks make business insurance a mandatory requirement in order to protect small business loans and payments.

• Some types of policy will help you resolve problems before your client is even aware that any problem exists
• You can also protect your business’ turnover should something happen to you which affects your ability to trade
• There are a range of business insurance products to cover all of these types of events and many more, so what does your business need?

There are three business insurance policies that are a must for most small businesses:

1. Public liability insurance.
2. Employer’s liability insurance.
3. Professional indemnity insurance.

Public Liability Insurance

If your customers, clients or members of the public visit your business premises, including a home office, then it is well worth considering Public Liability insurance. This type of policy will protect your business should you be sued by a third party for a personal injury or damage to their property, incurred as a result of your business activities. The policy will cover the costs of damages awarded against you as well as the legal costs of defending the claim.

The type and scale of your business, as well as the scope of your activities, will influence the amount of cover you require however the majority of small businesses will have at least £1 million of protection. Public Liability insurance is not compulsory but you may find that clients or customers ask for proof of such insurance prior to engaging your services.

Employer’s Liability Insurance

The health and safety of employees whilst at work is the responsibility of each and every employer. There is a chance that your employees may be injured at work, or that they, or your former employees, may become ill as a result of their work while in your employment. As a result of this, your current or past employees might try to claim compensation from you if they believe you are or were responsible.

Over the past decade there has been a huge increase in litigation and record-breaking court awards. An Employer’s Liability insurance policy will aid you to meet the cost of legal fees and compensation should a claim be successfully won against you.

The introduction of the Employer’s Liability (Compulsory Insurance) Act in 1972 made Employers Liability insurance a legal requirement. A business which cannot produce an Employer’s Liability insurance certificate upon request from the Health and Safety Executive runs the risk of a £1,000 fine and up to £2,500 a day thereafter while it remains without appropriate insurance.

Employers in the UK must be insured for at least £5 million however each employer should carefully review their circumstances and assess whether they need to increase this limit of cover to £10 million. This may sound like a lot, but the premiums are relatively inexpensive.

Once you have bought an Employer’s Liability policy, your insurer will issue you with a certificate which clearly states your minimum level of cover and the full name of the company or companies insured. It is a legal requirement for employers to display this certificate where employees can have reasonable access to it. Since 1st October 2008, the law allows employers to display this certificate electronically.

Professional Indemnity Insurance

If your business activities involve the sale of your skills or knowledge, especially in the form of advice, you should consider buying Professional Indemnity insurance. Even the most respectable companies can find themselves in dispute with a client over a mistake, and, in the event that a claim is made against you, this type of policy will cover legal costs and compensation. Some policies will even help you to rectify a mistake before it comes to the attention of your client, thus protecting your reputation and avoiding litigation.

In choosing the level of Professional Indemnity cover, the value of contracts agreed with your clients should be taken into consideration as well as the financial impact on your business should an unforeseen problem arise. Broadly speaking, it is in your best interest to purchase the highest level of insurance you and your business can afford.

You may find that your client requires you to have cover in place before you can work with them. Many UK government departments for example will require their contractors and consultants to have at least £5 million of cover. It is also worth considering ‘retroactive’ cover for work completed in the past. The option to extend your Professional Indemnity policy in this manner should be offered to you at the time of quotation.

Professional Indemnity insurance is favoured by the majority of professionals ranging from architects to consultants, from advertising to PR executives. Professional Indemnity insurance for accountants, lawyers and financial advisers is mandatory.

Why buy small business insurance with Coverzones?

Arranging your small business insurance should be quick and simple, giving you the confidence and freedom to focus on what matters most – your business activities. Coverzones is one of the UK’s leading small business insurance quote comparison websites.

Users of the service can compare prices from the UK’s top insurance providers, then choose and buy the policy which suits their business best without ever having to leave the website. Simply enter your details, specifying your trade and individual requirements, and Coverzones does the rest, searching the market for the cheapest quotes within seconds.

For more information visit the Coverzones website or contact the Customer Service team directly on customerservices@coverzones.com.

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