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SMALL BUSINESS INSURANCE: AN ESSENTIAL GUIDE

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From liability insurance to property protection, small business owners must be aware of the measures to enact to protect their company. Here, we look at what cover is out there and speak to four businesses that put key policies in place.

Having small business insurance protection you can trust is crucial to your business’s future and your own peace of mind, but so many company owners place the issue of insurance too low on their list of priorities.

Businesses need clear advice and guidance on the types of insurance that are relevant to their needs. But what insurance should you go for? Some measures are required by law, such as employers’ liability insurance for those businesses taking on staff. But there is a variety of additional policies that may be appropriate, ranging from cyber insurance to business interruption insurance and terrorism cover.

In this guide, we clarify the insurance options to consider and speak to small companies in a range of sectors that took out policies to suit their particular needs. Some of these businesses were unsure in the beginning about how to get covered but, through helpful advice from insurance professionals, were soon afforded the knowledge to put the right insurance provisions in place.Whatever their industry, all share an appreciation of the fact that their business is now prepared for unforeseen circumstances, allowing them to focus their efforts on what they do best – running their business.We hope this guide proves to offer a useful insight into getting the right cover for your own business needs.

Whether you are a business owner, an independent professional or self employed, getting insurance in place can help to protect you and your company against unexpected costs. There is a wide range of insurance products available offering varying degrees of cover, so ensuring that you have the correct amount and types of insurance for your business is incredibly important.Compulsory insuranceSome types of business insurance are required by law. If you are an employer, you are legally required to have employers’ liability insurance, which covers the cost of compensating employees who are injured or become ill through work. This type of insurance will not only cover the cost of compensation to your employee but also the cost of any associated legal fees.

The cost of this cover will depend on the nature of the business, the number of people employed and your previous insurance claims history. It is important to make sure that, as a responsible business owner, you shop around to get the best cover for your business. This should include the policy that is most appropriate for your business and not just be based on cost.Many businesses use motor vehicles for travel and to deliver or pick up products. A vehicle that is used for a business is just like a personal vehicle in that it is a legal requirement to have motor insurance.The minimum amount of cover needed is ‘third party only’, which covers the cost of injuries and damage to other vehicles, although most will choose to cover the costs of damage to your own vehicle as well. If your business involves employees driving company vehicles then make sure that you have them covered – it is required by law.

If your employees drive their own vehicles while working for your business, you are not obliged to pay for their insurance; however, it is advisable to make sure that they have the minimum level of cover required by law. Also make sure to check that they have correctly declared to their insurer that they are using the vehicle for business use, as not doing so will invalidate their cover.

If motor vehicles form a core part of your business, such as a taxi company or a courier service, specialist motor insurance policies may offer more appropriate cover. Not all insurance is compulsory, but buying other types of insurance can be much more than a sensible precaution – they can make your business stronger, safer and more efficient. Insurers can help you to identify the wide range of risks you face every day, and perhaps some that you didn’t even know about.They can help you to put systems in place to control those risks and prevent them from turning into serious setbacks. When problems do arise, insurers provide financial help to continue doing business, and get you back on track through replacement, repair or reinstatement.

Liability insurance

While employers’ liability insurance covers the cost of compensation to employees, there are other claims that businesses need to protect themselves against. Owners of small businesses should consider public liability insurance to cover the cost of compensation to members of the public for injury, death or damage as a result of negligence.Similar insurance products to consider include product liability insurance for compensation to the public as a result of a fault in one of your products and professional indemnity insurance, which covers the cost of compensation to clients if your professional advice has caused them to lose money.Making sure that your business is protected against unexpected liability claims will help provide piece of mind, so that you can focus your efforts on your business.

Property protection

The physical structure of a business premises and your business stock are also very important components to protect. Unexpected damage and an inability to continue operating from the premises can arise from fire, flooding, burst pipes, theft and subsidence. While it is not a legal requirement, it is highly recommended that if you own the building or have stock and equipment there then you purchase insurance to cover these assets. Business interruption insurance is usually sold as additional cover, but can be crucial to business survival should you be unable to continue trading as a result of damage to your premises.

Cyber insurance

Digital assets are now increasingly important for businesses of all sizes and can also come with new risks. Cyber insurance is becoming increasingly vital for businesses to protect against malicious cyber attacks and non-malicious cyber incidents that compromise computer systems. Cyber insurance can provide cover for business interruption caused by a cyber attack or incident, data breaches, cyber extortion, damage to digital assets, media liability and some third-party costs.Many policies offer a ‘360o service’, which helps you assess your cyber risks to protect against a cyber attack or incident, and provides near-immediate 24/7 incident management and support from cyber forensic specialists to assess your systems, identify the source of any breach and suggest preventative measures for the future.

Protection insurance

Employees are a business’s most valuable asset, and making sure that your business and employees are looked after should anything happen to them is a priority. Life insurance and critical illness policies pay out lump sums to your employees or their nominated loved ones if they die while working for you or contract a critical illness covered by the policy. Income protection pays a regular benefit in cash to a person who cannot work because they have had an accident or are sick. Many policies will provide back-to-work services to support the employee in their steps towards recovery and eventually getting back into work.These policies are important to consider if you are self employed, as well as if you have employees, as if you are out of action then it is likely that your income will be impacted too.

Specialist areas

Depending on what kind of business you . run, there are more specialist areas of insurance that you may wish to consider, such as money insurance, which replaces stolen money belonging to your business, or trade credit insurance, which protects your business against the risk of you not being able to pay your debts because your customers cannot pay their debts to you.

Conclusion

Business insurance is usually sold as a package, combining a number of different policies under one premium, so you should shop around to get yourself the best deal and the best cover. Remember that the cheapest policy may not always be the best. No one can predict the future, but it is always best to prepare yourself as best you can for any unexpected circumstances.

Source: http://smallbusiness.co.uk