How important is the need for business insurance to cover your staff, your business and its assets? Do you need the cover at all?
After all, you are probably contending with a whole raft of overhead costs already and business insurance simply adds to that burden. As the chairman of the Federation of Small Businesses (FSB) told the Guardian newspaper on the 21st of March 2017, small and medium sized enterprises usually have to get by on fewer resources and work to tighter profit margins than larger companies.
But it is worth taking a closer look at just what business insurance is designed to safeguard in order to weigh up its advantages and benefits for your own enterprise – it’s why, here at GSI Insurance, we have produced a detailed guide to the subject:
Your business premises
- if you own the premises from which your business operates, you are likely to have made a considerable investment in their acquisition;
- the structure and fabric of the building needs the protection of business insurance against such serious risks as flooding, fire, impacts, storm damage, vandalism and theft;
- if you are buying the property with the aid of a mortgage, your lender is almost certain to insist on the building being adequately insured at all times;
- if you lease your business premises, your landlord is likely to have arranged some form of building insurance, but it is important to establish just how far this might go in protecting your own interests in that place of business;
Business equipment, plant, machinery and stock
- whether you own or lease the premises, business insurance may also protect its contents, together with any equipment, plant, machinery and stock you carry;
Public liability insurance
- a major threat to any business arises if one of your customers, a visiting supplier, a neighbour, or member of the general public is injured or has their own property damaged through some business activity of yours – whether on your premises or off;
- if you are held liable – because of your negligence and breach of your general duty of care – you may be ordered to pay a substantial sum in damages;
- these claims – especially if an injury is involved – may take on very substantial sums, so it is common for public liability insurance to provide indemnity of at least £1 million;
Professional liability insurance
- many businesses serve their customers with professional advice and guidance – exclusively or as part of a wider product offering;
- in the event of some error, miscalculation or genuine mistake on your part, however, your customer might suffer financial loss and hold you liable for professional negligence;
- professional indemnity insurance is designed to safeguard you against such claims and, in many professions, is a condition of being able to practice (as a lawyer, accountant or architect, for example);
Employers’ liability insurance
- there is a further, quite separate, liability your business faces if you employ any staff at all;
- it then becomes a legal requirement for you to have a minimum level of £5 million employers’ liability insurance, to ensure that you are able to meet claims from present or past employees who may have been injured or who have contracted a longer-term illness because of their work for you.
There are many elements of insurance that your business may need. With the exception of employers’ liability insurance and building insurance (if you have a mortgage), there may be no compulsion to have it – but your business remains at serious risk in its absence.