When you set up a business, chances are you will take out some kind of business insurance – some types are mandatory, whereas others will provide you with peace of mind while you concentrate on building up your enterprise.
In this part of ByteStart’s Start-Up Guide, we look at the most popular types of business insurance:
Public liability insurance
Public liability will protect you in the event that you cause damage to property, such as when visiting a client’s site, or cause physical harm, injury or even death to a third party as a direct result of your business activities.
If you run a business and customers visit your premises, you should take out this type of cover.
Employers’ liability insurance
Employers’ liability insurance will protect your business in the event of claims by employees for injuries or sickness which resulted from their work.
This type of cover is compulsory for all businesses which have employees, however there are some important exceptions to this rule:
1. You are not obliged to take out cover if you are a limited company director, own at least half the shares in the company, and you are the only employee.
2. If you are a sole trader, and employ only close family members, you are also exempt from the rules.
The Health & Safety Executive (HSE) enforces the rules on Employers’ liability insurance, and can fine businesses without adequate cover up to £2,500 per day.
Professional indemnity Insurance (PI) cover
Professional indemnity insurance will cover the cost of claims against you by dissatisfied clients for negligence, loss of documents or data, and infringement of copyright.
It is particularly relevant for people who provide professional advice to end clients, such as consultants and accountants.
In some cases you may be contractually obliged to take out a certain level of cover – this is often the case for IT contractors and interim managers.
Get the full details in ByteStart’s Guide to Professional Indemnity Insurance.
Tax protection insurance
A useful type of cover, this will cover the cost of professional representation in the event that you undergo an HMRC enquiry relating to any area of taxation. Depending on the level of cover, it may even cover any extra taxes you are found to owe.
Directors’ and Officers’ insurance
This will cover a company’s directors in case they are accused of misleading the company, or engaging in ‘wrongful acts’.
If you have business premises, you may want to cover the contents against a range of calamities, as you would do with home contents insurance. If you run a business from home, make sure that your home contents cover will protect any business property.
This is standard insurance for any vehicles your business owns. Make sure you check with your insurer if you decide to use your own vehicle for business use.
Unsurprisingly, this will cover the accidental damage to, or loss/theft of any business equipment.
Legal expenses cover
If you have to employ the services of legal experts on behalf of your business, this type of cover will protect you in a range of scenarios.