Starting a new business can generate much excitement… and also concern. After all, in the early stages, you could be cash-strapped – and this would leave your business vulnerable if it runs into the difficulty that requires significant financial expenditure to put right.
Of course, you can never be certain what the future holds; however, you can give yourself a reassuring safety net in the form of business insurance. There are many different types of business insurance – and which of them your start-up should have will depend very heavily on the firm itself.
Assess your corporate requirements and risks
There are various scenarios in which your business could hit a speed bump, as Money Donut illustrates. For example, a major employee could suffer an illness or accident that forces them to spend some time out from their job. Alternatively, fire or flooding could engulf your business premises and leave them barely usable. Losing data from a computer system is also a possible worry.
There are forms of business insurance that can cover all of these risks. However, before you take out any such insurance, you should do what you can to manage and reduce those risks. For example, if you fear the possibility of theft, you could bolster your workplace’s security. Meanwhile, computer data can be kept safer if you back it up more effectively, such as to cloud storage.
Such measures are vital because they could help you reduce how much business insurance you will need to take out – and, thus, how much money you would have to pay for insurance. While it would be beyond practicality to entirely eliminate all risks, you could still make yourself appreciable savings on insurance premiums.
There is only one legally mandatory form of business insurance…
This is employers’ liability insurance, which the vast majority of UK companies are required to have. There are only a few instances in which a company would be permitted not to have it. A company without employees – for example, because it is run by a freelancer or sole trader – would be exempt, as would firms employing only immediate family members, Startups.co.uk reports.
If, however, your company is among the many that do need employers’ liability insurance, then the cover must be at least £5m. In fact, this might even need to rise as high as £10m, depending on the type and size of business you run and its history. As this insurance is intended to assist you in paying for compensation if any of your workers become ill or injured due to your corporate activity, your level of cover might need to be higher if the risks to your workers are higher as well.
Which of the optional business insurance options should you consider?
We have previously mentioned the possibility of your corporate building becoming damaged beyond practical usefulness. Therefore, if you own – rather than rent – that building, it would be shrewd to take out buildings insurance. If the building is owned by someone else, the responsibility of insuring it would be left with them; you could focus just on insuring your contents in the structure.
Of course, if your business has not been long-established, you might still be running it from home. However, if this is the case, you should still carefully look over the documentation for your home insurance, as your particular policy might not extend to covering business activities in your residential building. Thus, you probably shouldn’t rule out buildings and contents insurance after all.
As part of your business activities, you might regularly make face-to-face contact with the public; this would obviously be the case if you run a shop or restaurant, to cite just two examples. Thus, there would be the risk of a customer picking up an injury due to your firm’s activities – but public liability insurance, available from the Call Wiser insurance group, could help fund compensation.
- Types of Insurance for Your Home Business
- Buying Insurance and the Challenges Faced by Small Businesses
- Tips on Buying Liability Insurance for Your Small Business
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