• Catherine France

7 Reasons Your Small Business Needs Insurance

I know insurance might not be top of the list when you're setting up a new business and it's not easy to get excited about buying insurance, but it could be the very thing that ensures the success of your business if something goes wrong, and sadly sometimes things do go wrong.


Here are seven reasons you need to make sure that you have the right insurance in place as soon as possible.


1. You have a team of people


Employers Liability Insurance is a legal requirement if you employ staff and provides cover if a member of staff is injured, suffer illness or damage as a result of their work. If you only employ close family members you may be exempt.


Employers Liability Insurance is on a 'claims occurring' basis and not a 'claims made' basis. This means that if a claim is notified to you which happened a few years ago, it is the insurance policy that was active during that year that will payout, not your current policy. Therefore, it is important to maintain a record of who has held your Employers Liability insurance so that claims can be redirected quickly.


The legal minimum limit for this cover is £5million but most insurers will offer £10million as the standard minimum limit.


2. You publish content online


Professional indemnity insurance also provides cover for defamation, copyright infringement and breach of confidentiality.


This type of insurance would cover the legal costs and compensation, within the terms and conditions of the policy, if a claim is made against you this could happen if a client claims that one of your downloads contains an image you don’t have permission to use and they felt it has caused them to suffer a financial loss, or if a competitor feels you have said something defamatory about their product in a tweet or blog post which has damaged their reputation.


3. You rely on computers to run your business


Cyber Insurance is vital if you use a computer to run your business, have a website, social media accounts or use email marketing. The increase in the number of incidents where people use a computer to commit a criminal offence is on the rise and a cyber insurance policy can help, whether you suffer a data breach or a hacker holds you to ransom, provide cover against damage to your computer systems, removing viruses and loss of income in addition to which insurers can also include access to professional cybersecurity consultants and PR experts to help minimise the damage to your reputation which a loss of data could cause your business.


4. Your business involves giving advice


Professional Indemnity Insurance is important if you provide advice to other people and/or businesses, this type of cover is designed to protect you if you provide them with incorrect advice which results in them suffering a financial loss which could result in them trying to sue you. Professional indemnity insurance also provides cover for defamation, copyright infringement and breach of confidentiality, which are particularly useful if you are publishing a blog or regular content online.


Professional indemnity insurance would cover the legal costs and compensation, within the terms and conditions of the policy, a claim against you could arise if someone claims that one of your coaching courses doesn’t give them the result they were hoping for or perhaps a competitor thinks you have copied their work and they feel you are at fault. This does not mean you are at fault, but the insurance will help you defend such allegations.


5. Your reputation is on the line


Directors and officers are personally liable for making a mistake, it is often assumed, incorrectly that the personal directors of a company are not personally liable for mistakes made but even in a limited company the personal liability of the individual directors is unlimited.


Directors and officers are under increasing scrutiny, and allegations of mistakes can be made. These are called “wrongful acts” and include breach of trust, breach of duty, neglect, error, misleading statements, wrongful trading by a director or officer whilst acting on behalf of the company.


Directors and officers (D&O) liability insurance protect the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.


6. You have lots of expensive kit


Business Contents Insurance can protect the possessions and equipment in your work premises. A typical business contents insurance policy will cover damage or loss to furniture, tools, computers and equipment as a result of a fire, flood or theft but can also include accidental damage or malicious damage. You will need to add up the total cost of replacing all your contents to establish the sum insured you need.


7. You want to grow your business


Having the right insurance in place to protect your business and your cash flow demonstrates to new clients and investors that you're serious about what you do. It will also help if you are attending events or exhibitions where having your insurance, particularly public liability insurance, is vital.


What Next


If you feel worried that you don’t have the right business insurance and too embarrassed to ask?


I provide a friendly no-nonsense approach to explaining insurance that is designed to remove your fear and gives you the information, knowledge and confidence to talk to an insurer or broker about your insurance, leaving you feeling happier and smarter.


You can book a 30 minute 121 for £39.


I will send you the notes of our conversation so you don't have to worry about getting it all down, which can be tricky as we cover a lot! You can also have a copy of the zoom recording if you wish.


So if you need some help understanding the insurance you need to protect your small business then you'll need a link, here it is Book a 121


Further Reading


If you found this useful you might also like to read the following blog posts;


How do I know what insurance my start-up needs?


Who to buy business insurance from and how to know if you need advice?


What the hell is Cyber Insurance?


You can also find me on Instagram, Facebook and LinkedIn.

Content Disclaimer: The information contained above is provided for information purposes only. The contents of this article are not intended to amount to advice, and you should not rely on any of the contents of this article. Professional advice should be obtained before taking or refraining from taking any action as a result of the contents of this article. Catherine France disclaims all liability and responsibility arising from any reliance placed on any of the contents of this article.