If you own a business, are an independent professional or a self-employed worker, having business insurance is an important part of protecting your company from a variety of unforeseen expenses.
Types of Business Insurance
There are number of different types of insurance that fall under the umbrella of commercial business insurance. Some are compulsory while others are merely advisable given the risks.
- Employers’ liability insurance – This covers the cost of any claim made by employees due to an accident at the workplace. It will protect your business from the legal fees and medical bills owed to the NHS.
- Commercial motor insurance – This insurance is mandatory for any business that uses vehicles.
Other forms of insurance are not legally required but may be key when building client trust or simply for peace of mind. They include but are not limited to:
- Commercial property insurance – This covers the cost of rebuilding or repairing the business equipment, property, premises, or merchandise.
- Public liability insurance – This insurance safeguards you from claims made by third party individuals and members of the public. It is designed to cover the cost of fighting a claim as well as compensate the aggrieved for any injuries or property damage. It covers any claim of negligence brought against you or your business so long as the claimant is not an employee.
Type of Insurance and Cost
The amount of your premium will depend on largely on the type of business you run and the amount of risk associated with that business. The higher the risk, the higher the premium. Things that effect your total risk include the nature of your business, its annual turnover, the number of employees you have, and previous claims history. Having a good record is an excellent way to lower costs, as many insurers offer no claims discounts. Another way to lower your commitment is to have a higher excess.
As always, it is important to consult with a broker to insure you are being covered properly, as many cheaper policies include exclusions that could leave your business vulnerable. When searching for a broker, be sure to confirm they belong to the BIBA, or British Insurance Brokers Association. In addition, any policy provider you purchase from should also be part of the Association of British Insurers (ABI).
Comprehensive Business Insurance
Business insurance is typically offered as a comprehensive package that deals with both liability protection as well as other policies that adapt to the needs of your company. Most of these insurance products are designed to cover a wide array of businesses, from manufacturers and wholesalers to distributors and service providers. A typical policy will provide cover for commercial businesses with up to £4.5 million turnover and £5 million sums insured, with the figures adjusted each year to account for inflation.
Some business will tailor their coverage specifically to meet your needs. The benefits of a tailored cover is a more efficient calculation of cost. In other words, you are protected for things that present the most risk and not things that don’t apply to your situation. Conversely, a traditional business insurance package may cover things that are common to your trade, but not your specific business. When choosing your business insurance, make sure the product is flexible enough to adapt to your needs and the changing market.