Whether you’re running a multinational corporation or a small business operating from a spare bedroom at home, insuring certain aspects of your business is essential.
For a number of years a growing number of people have been choosing to work from home. With IT costs falling, broadband becoming more widespread and its access speeds faster, and a host of internet technologies such as internet phones (VoIP) emerging, running a business from home is now an affordable, realistic option.
But before you start thinking of converting that shed in the bottom of your garden to an office, you should seek some professional advice to ensure you cover your business requirements.
Before you start a new venture you need to ascertain what business insurance cover is required. This can include:
Professional Indemnity
Professional indemnity insurance indemnifies professionals against third parties’ claims of negligent acts committed in the course of their professional duties.
In many businesses such as accountancy or IT consultancy it is a legal requirement to have PI insurance. There are three main areas of PI insurance cover: firstly against a negligent act, error or omission; secondly, cover against a breach of duty; and thirdly, cover against civil liability, which include breaches of contract, libel or slander.
Employer’s Liability
Employer’s liability protects a business from any claims made by the employees. For instance, claims for accidents in the workplace or sickness caused by the working environment.
There are many different types of claims employees can make on their employers. Some of the more common arise from slips, trips or falls, stress and anxiety. Even if you work alone and employ someone on a temporary basis, you will be liable for any injuries that they sustain.
Public Liability
Public liability insurance protects against claims of a third party due to damage or injury as a result of your business’s activities.
The owner or occupier of a business premises is required to provide a level of care to the general public. There are three main degrees of care.
Firstly, people invited onto your premises for any reason are called ‘invitees’. If an invitee spends money on a service your duty of care and your chance of being liable increases. For example if you run a karting centre and one of your customers is hurt due to faulty machinery, you are liable for their injury.
Secondly, if people enter the premises with the permission of the occupier (called ‘licensees’) but without any economic advantage to the occupier, then the duty of care is less than in the case of invitees. An example of this would be a travelling salesman.
Thirdly, if there are ‘trespassers’ who enter the business premises without the permission of the occupier, there is still a degree of care owed but it is slight compared to both invitees and licensees. A good example of this is a child who wanders onto a business premises and injures themselves without necessarily knowing the dangers associated with the building.
There are many other types of insurance that small businesses might require including:
Equipment insurance
Equipment insurance covers the damage or loss of equipment within a business, subject to the terms of agreement. For example if a new PC is damaged or dropped and wasn’t covered in the warranty, a good insurance policy would cover the purchase of new equipment.
Buildings and contents cover
Buildings and contents cover insurance protects a business’s property from damage, including the fixtures and fittings inside the property.
If you are storing your stock at home then contents cover will be essential.
You could risk losing business and income if tools are stock is stolen and you cannot afford to replace them.
Legal expenses insurance
Legal expenses insurance helps protect a business if legal action is taken against the company and, for example, legal fees and court costs are incurred.
Self-employed workers in small businesses rarely consider the implications of being sick or having an accident, which can leave them unable to work for long periods of time. Sickness and accident policies cover these eventualities, as well as some longer term policies such as income replacement insurance.
It is generally a good idea when shopping around for the best insurance quotes to compare like-for-like cover, a popular way of lowering cost. So make sure you understand every aspect of what is included under the proposed insurance deal – it will greatly benefit you if and when you need to make a claim.
It’s important to seek specialist advice and to request quotes for your specific needs when looking for insurance.
