What insurances do businesses overlook?

There are a multitude of potential problems you could encounter while running your business, which could adversely affect its financial health and reputation. Since nobody can predict the future, it's crucial to have insurance to give you peace of mind that you’re covered if the worst were to happen.

As a business owner, you have a range of insurance types to choose from. Which ones you need depends on the nature of your business and the risks you might face, so it’s important to consider each one carefully to decide whether it’s worth paying for. If you overlook an insurance policy that could be helpful, you might regret it.

What insurance does a business need?

If you have one or more employees, you definitely need employers’ liability insurance, as this is a legal requirement (unless you only employ family members or people based abroad). It covers the cost of paying compensation to an employee who is injured or becomes ill due to working for you, along with any legal costs involved.

Your policy must give you at least £5 million of cover and be from an authorised insurer. If you don’t have the right insurance, you could face a fine of £2,500 for every day you’re uninsured. There’s also a £1,000 fine for not displaying your employers’ liability insurance certificate or refusing to show it to an inspector.

Public liability insurance is essential if you come into contact with members of the public in the course of your work, whether they visit you at your premises, you provide them with services in their homes, or you run events attended by them. It provides protection if you are sued by a member of the public who is injured or becomes ill, or whose property is damaged, as a result of your work.

Although public liability insurance isn’t usually a legal requirement, some trade associations and clients may insist you have it.

Professional indemnity insurance is crucial for individuals who provide professional services or advice. It safeguards against potential financial losses that may arise if a client claims they suffered due to your work - because you’ve given bad advice or made a mistake, for example. 

Just as you would protect your home and its contents, it's essential to safeguard your business buildings and assets. Business buildings insurance covers damaged business premises following events such as a fire or flood. Meanwhile, business contents insurance covers you if items such as furniture, equipment or stock are stolen or damaged.

You can get quotes for a range of policies on our business insurance page.

Other business insurance types to consider

There are a number of types of business insurance that are less well known and that businesses can easily overlook. However, they could provide you with valuable protection in certain circumstances. The main ones include:

• Cyber insurance – this provides coverage for financial losses incurred by your business due to data loss or damage - whether your own or a client’s - resulting from cyber attacks or breaches of your IT systems and networks 

• Directors’ and officers’ liability insurance – this is also known as D&O insurance and protects your business’s directors and key managers from claims made against them for wrongful acts, such as breach of trust or misleading statements

• Business interruption insurance – you can claim on this type of policy if your business loses money as a result of not being able to trade due to circumstances beyond its control, such as a fire damaging your premises, equipment breaking down or a power cut

• Legal protection insurance – this type of policy covers any legal costs you may face as a result of your business activities. It can be useful for covering expenses not included in your other business insurance policies. Legal expenses insurance, also known as legal protection insurance, can be purchased as an add-on to existing insurance or as a standalone policy

Read our guide to how to claim on your business insurance if you need to. 

Do I need business insurance for an online business?

As an online business owner, you may encounter various risks that could benefit from insurance coverage. The specific types of business insurance you need will vary depending on the nature of your business.

You won’t need employers’ liability insurance if you don't have employees. But while you may not come into contact with members of the public directly, you may still need product liability insurance, which insurers usually include in public liability insurance. Product liability insurance covers you if you supply or manufacture a product that injures someone, makes them ill or damages their property.

You may need professional indemnity insurance if you provide professional services or advice online. You may also have stock you need to insure, which you can arrange as part of a business contents insurance policy or through standalone cover. In addition, you may want to protect your premises, equipment or tools. 

What insurance do I need to start a business?

When you’re setting up a business, it’s wise to have your business insurance policies in place before you start trading in case something unexpected happens in the early days of your business. You can’t take out insurance to cover something that’s already happened!

A new business is likely to be less financially secure than a more established one, and you’ll be trying to build up your reputation, so the more protection you can put in place from the start, the better.

How to get insurance for a small business

You can compare quotes and take out business insurance through comparison sites such as Uswitch. 

If you have more complex needs, it’s worth speaking to a business insurance broker, who can look at the whole of the available market to find the best policy for you.

Read more …

• Compare business insurance

• Compare public liability insurance

• Compare employers’ liability insurance

• Compare professional indemnity insurance