How do I know what insurance my start-up needs?
Are you thinking of starting a new business? You know you will need to make sure you have the correct insurance in place, but do you feel confident that you know what you need?
While it might not be top of your to-do list, having the right insurance in place could be the difference between success and failure, if you’re not insured and a claim is made against you could your cash flow survive? And don’t forget your insurance premiums are tax-deductible!
Here is a quick guide run through the main types of insurance you will want to consider to help protect your business. If you need more information you can book a 30 minute 121 session over on my website - https://www.catherinefrance.com/booka121
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 respond to the claim, 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 a minimum limit.
Public Liability protects against compensation claims for injury or damage to customers, suppliers or third parties caused by you. If you come into contact with members of the public either at your premises or elsewhere this type of cover may be a contractual requirement. If you exhibit at fairs or craft market’s you will be asked to hold this type of insurance and probably provide a copy of it to organisers.
Manufacturers, distributors, suppliers and retailers could all be liable if a product or a component part causes injury or damage to a third party i.e. the person who buys it from you. Product Liability Insurance would cover your legal fees as well as any compensation you are required to pay. It is not currently a legal requirement to hold this type of insurance, but you do owe a duty of care towards your customers. Product Liability Insurance is usually coupled with your Public Liability Insurance but check with your insurer or broker as it can vary.
Professional Indemnity Insurance is important as 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 taking legal action against you. 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. A claim against you could arise 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 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.
Business Buildings Insurance is a must whether you work from home or your business premises make sure that you are insured against damage to the structure and that you insure the structure for the rebuild cost and not the market value. If you have a shop, most insurers will include an amount for damage to shop fronts and replacement glass.
Top Tip: the amount of buildings insurance you buy should include land, paths, walls, driveways, and car parks.
Home Insurance - You may not have thought about letting your home insurer know that things have changed. But you should 100% tell your home insurers that you are running a business from home. Failure to do so can invalidate any claim made, whether or not the cause of the claim was related to your work or not. If your property, god forbid, burnt down and a loss adjuster found that you run a business from home then they could refuse to pay the claim on the basis that you withheld a material fact, however unfair this may sound. As well as telling them you are working from home you might want to make sure they are insuring your business equipment and stock. If your home insurer won’t extend cover to include your business you should look for a "working from home" policy.
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.
Stock can usually be added to most business insurance policies and will provide replacement costs for stock held at your premises or in storage. High-value stock may be specifically insured, for example, digital devices, precious metals or luxury goods.
Business Interruption is there to help you get back up and running if there is an event, such as fire or flood, which stops or interrupts trading, and this type of insurance can cover the consequential loss of revenue. It can also provide alternative premises, so you can keep trading, cover if a main supplier suffers a loss and your business suffers or cover if a laptop/tablet is stolen preventing you from trading but check with each individual insurer for full terms and conditions.
You will need the right Motor Insurance for business use if you are visiting clients in your car or transporting your stock or goods between your business, suppliers to events. Goods in transit insurance (GIT insurance) is designed to protect your business from losses caused when you transport or deliver goods simply because items can be stolen broken or lost between dispatch and delivery. However, if you are using a courier then they should have this insurance in place as part of the service to you.
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 reputational damage a loss of data could cause your business.
I appreciate this is a lot of information to take in and you might not know which covers you need so if you need a it more information from an independent expert you can book a 30-minute 1-2-1 call with me to discuss this in more detail, please pop over to catherinefrance.com to book.
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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.