Guide to Buying Insurance for an SME
For many Small Businesses, Insurance is a necessity. For example, if you take on staff (even if they are unpaid or volunteers) you are required by law to have Employers Liability Insurance. Depending on what type of business you run, your clients may insist on you having Insurance before taking out your services, and if you are doing contract or government work, it may be a condition that you have Insurance before they’ll even consider doing business with you.
There is also a wide range of recommended Insurance that may not be necessary for you to continue business operations, but can insure that starting back to work again, or at all, after an accident is as simple as possible. Many SME’s never reopen after a disaster, and inadequate Insurance is the main reason why. Cover such as Buildings and Contents Insurance, or Public Liability Insurance should be seen just as essential as cover required by law. With the HSE reporting that insurance claims cost business owners over £20 million last year, ensuring that your business is covered has never been more important.
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What Small Business Insurance should I consider?
When running a business, it is important to make sure that all aspects are covered, including your liability towards your staff, customers, members of the public, your business activities and your possessions, including the building and its contents. Cover you may need can include:
Employers Liability Insurance
Employers Liability (EL) Insurance is a legal requirement for anyone who takes on staff. The very limited exception being if they are close family members. The minimum cover you can take out is £5 million and you can be fined up to £2500 for each day that you are not covered. EL Insurance protects your legal liability towards an employee if they were to have an accident at work or become injured as a direct result of working for you. With workplace injuries costing businesses over £14 billion in 2013, cover is essential.
What should I look for?
- If you have casual or occasional workers, seasonal staff or temporary staff, make sure that your policy covers them as well as your permanent staff.
- Some policies may exclude certain activities such as driving, that will need to be covered under a Motor Insurance Policy. However, if it is included, check that you’re not paying twice for the same cover under both policies.
- By the very nature of this insurance, you will need to make a claim should an employee be unable to work. Therefore you may wish to consider what else you may need should an employee be out of action such as Key Person Insurance or Loss of Income should you lose an invaluable team member.
Public Liability Insurance
Public Liability (PL) Insurance provides cover for any claims made by members of the public for any damage done to their property or themselves while in your place of work. Members of the public can include customers, suppliers and even inspectors that are there on business. Even if you conduct your business at home you will need cover for this and any business activities you do off-site.
What should I look for?
- Level of cover – The lower standard cover is generally £1 million however you should ensure that the cover you have is sufficient for the type of business you have. If you are working with other companies or bidding for large corporate contracts then they can stipulate the levels of cover that you need. PL Claims can become extremely costly so at Buckingham Insurance we recommend a minimum of £5 million worth of cover.
- Excess – Whilst some policies may seem considerably cheaper than others, check the level of excess that you are expected to pay in the event of a claim.
- Exclusions – check your policy for any business activities that could be excluded such as height or Defective Workmanship. If Defective Workmanship is excluded and you offer a service then you may wish to consider Professional Indemnity Insurance.
Professional Indemnity Insurance
Professional Indemnity (PI) Insurance is essential for any company that provides a professional service or advice to their clients. This could include legal advice, accountancy, an architect or even the services of a therapist or counsellor. Even advice given in good faith can have negative consequences and you can be held accountable for this. Anyone who provides a professional service should have cover in case their advice or work has a negative impact on their client.
What should I look for?
- Does this policy comply with the standards set by your profession’s governing body? If you are a contractor of a larger organisation, do you meet their requirements?
- Are you covered for all eventualities? Policies can exclude errors and omissions, damage from latent faults and failures due to not meeting time limits.
- A clear procedure on what your insurer will do. Professional Negligence claims can be complex, ensure that you are aware of what happens if a claim is made against you.
However, all companies are different and need cover for differing reasons or activities. Click here to read more about our Business Insurance options. With nearly 40 years experience, we are well equipped to arrange a policy to suit your needs. We can create a package or Commercial Combined Policy to cover all aspects of your business.
We work closely with our insurers and can tailor a policy to suit the exact requirements of your business so you have cover in all the places you need it and aren’t paying for cover that you don’t.