How to choose the right level of business insurance cover
While business insurance as a whole can benefit every business - and certain products are mandatory for some businesses - the type and level of business insurance cover you need will be determined by your individual company’s needs.
Some factors include the size of your company, whether you have employees, the type of work you do and the sector you work in, the type and regularity of contact you have with the public, what equipment you have - and even whether you have a website or online presence.
Even the location of your business can change the level of insurance you might need.
But how do you know what level of insurance you need, or what types of insurance might not be necessary for your business?
What are the main types of business insurance you might need?
Employers’ liability insurance
If your business has employees, then it’s a legal requirement that you have employers’ liability insurance in place.
This is non-negotiable and you could end up facing a hefty fine if you’re found to not have this type of insurance despite having a workforce.
According to the gov.uk website, you could face fines of up to £2,500 for every day you’re not properly insured and could even face a £1,000 fine if you don’t display a liability certificate or present on if requested by an inspector.
The type of employees you have is irrelevant. It doesn’t matter if you have full-time, part-time, volunteers or temporary contract workers, if they’re your employees then you need employers’ protection insurance.
Employers protection is there to cover you in case an employee is injured or becomes ill as a result of working for you.
Your employer liability should cover you for at least £5m according to the Government’s website and must be from an authorised insurer.
Public liability insurance
Public liability insurance helps cover your business - including you, your employees, your property and any events you host - from the costs of legal action if a member of the public is injured or dies, or suffers damage or loss of property and income as a result of negligence.
If your business has any contact with the public, no matter how little it is, it’s definitely worth considering getting public liability insurance to protect you.
We’d recommend it along with employers’ liability insurance as an essential insurance product to have as a minimum.
Could your business also use these types of business insurance?
Employer and public liability are essentially the non-negotiable business insurance you should have as most businesses have employees and most - if not all - have at least some contact with the public during the course of a day.
But other types of business insurance are more dependent on the type of business you have.
Let’s have a look at some other common types of business insurance that you might need.
Building and contents insurance (material damage)
If you run your business out of an office or a dedicated premises, you could definitely benefit from buildings and contents insurance.
This protects your property and contents, providing cover in the case of loss or damage due to incidents like fire or flooding, or any other accidents.
It’s worth noting, the contents insurance element will only cover contents of the building owned by your business.
You will also only be covering the cost of repairs or new building work, not the market value of the property.
It’s also possible to get commercial building insurance if you run a business out of your home.
You can talk to an insurance broker or provider about what that entails.
To make this more comprehensive, you could package buildings and contents with public liability to cover any accidents involving the public when they’re on or in your business’ property.
Plant or machinery insurance
If your business is reliant on your tools or equipment to complete work, like manufacturing equipment in a warehouse, it can disrupt your work if the equipment is damaged and stops working - especially if the equipment is expensive and can’t be quickly replaced.
Equipment insurance will provide you with the cover and funds to quickly get new equipment and get your project back up and running fast, so you can hit your deadlines and avoid unnecessary disruption.
If you’re using equipment outside of your workplace, then you will likely benefit from adding “all risks” to your equipment insurance policy as this covers your equipment wherever it is being used - not just when it’s on your business’ premises.
If you manufacture or sell products to other businesses or members of the public, then you’ll need product insurance.
Product insurance covers you in case a buyer is injured or becomes ill or dies as a result of using your products.
Even if you aren’t the manufacturer and are only selling the products, you could still be liable in case of an incident so you’ll need to be covered too.
It also covers you in the event your product causes damage to property.
Business interruption insurance
If you suffer losses in your business because you can’t carry out work due to an unexpected event, then business interruption insurance can help you cover the costs of those losses.
The aim of business interruption insurance is to simply put your business back in the same trading position you were in before the disruption occurred.
The type of disruption will often be determined on a case-by-case basis.
Goods in transit insurance
This type of insurance provides cover for any major risks of damage to goods in transit, or theft of goods from vehicles owned by the named on the policy.
If you regularly transport goods in a commercial vehicle then this cover could protect you from claims or losses as a result of damage to the goods you’re responsible for when in transit.
Commercial fleet insurance
If your business has multiple vehicles, insuring each one individually can quickly become expensive, it’s also very restrictive because it limits drivers to particular vehicles.
Fleet insurance helps you cover all your vehicles under one policy.
It works the same as regular car insurance but extends the cover to every vehicle on the policy.
Key person insurance
Key person insurance can be used to provide health cover to key members of staff against critical illness or death in service.
It’s typically used as an incentive for more senior staff.
Choosing the right business insurance cover
While business insurance products are individual, it’s more typical for a business to buy a package of products that cover them in different areas based on their needs.
Generally speaking, business insurance (package or commercial combined) include employers’ liability and public liability as a base level of insurance and then build the other products around their company.
If you want to start getting more out of your business insurance, or are confused about what level of business insurance would be best for your company, then get in touch with us.
Our expert team of advisors can work with you to understand your business and advise you on the best level of cover based on your individual needs and budget.