So yours is a little business that you work around the kids, working in to the early hours and sending out to customers. Does that mean you don’t need business insurance? Well, in a word – no.
So what would you do if you upset a client (late delivery of goods or services, cancellation of orders etc), and they decided to take you to court? Would it wipe out all your profits and savings? Could you afford the legal costs?
Do you know what types of business insurance there are?. Here is a breakdown:
One size doesn’t fit all
There are different types of business insurance and you should know what your business needs so you don’t get hit with a fine, or worse. You can get reputable firms that can advise you on all types of commercial insurance, but you may want to look into business into
Professional Indemnity Insurance
This type of insurance covers you for claims of negligence that a client may bring against you. You could be a bookkeeper, a business coach, or other service or advice providing professional and have a disagreement with a client who then decides to take you to court. This type of insurance would cover the cost of defending yourself in court (legal fees), and damages awarded to a client in such a civil lawsuit.
Employer’s Liability Insurance
Are you employing someone to help you out? Even if it’s for an hour a day, you’ll be seen as an employer in the eyes of the law and you’ll need Employer’s Liability Insurance – especially if they work on your premises (home or commercial property).
Employer’s Liability Insurance will cover your business business if your employee falls ill or is injured while working for you and decides to make a claim.
The level of cover you take out depends on the size and the level of risk. The minimum level of cover in the UK is £5 million (yes, you read right), but you may be advised to take a higher cover if there is a lot of risk associated with the type of work your business does.
When you take out Employer’s Liability Insurance, you’ll be given a certificate, which you need to keep for 40 years – and the Health and Safety Executive may ask to see it. They can fine businesses up to £2,500 a day if they have not got this insurance policy, and can even close down your business if you refuse to get one.
Commercial vehicle insurance
Drive a van to deliver you scrummy cakes or wares to customers? Do you use your car to pick up stock regularly but still have yourself registered on individual insurance? You could invalidate your insurance by not taking out the right insurance cover, leaving you in hot water and out of pocket if the worst happens.
Public Liability Insurance
Even if you work from home, if you have clients visiting you, hold meetings in your home, etc. then you need to take out Public Liability Insurance. This will help cover the costs of any claims for injury against you – don’t cut corners, unless you have enough money in the bank to foot huge legal bills and payouts.