You will also be able to cover your property with property insurance. Property insurance will usually cover your business’s equipment and the building or buildings where you operate your business. With this type of policy, it will be left to you and your insurer to determine a value for your property and you will need to make sure that you get a fair valuation. The worst possible scenario is that you need to claim against this policy only to find out it isn’t enough to cover the costs associated with the claim. You will be able to purchase property insurance policies that offer protection against specific risks, such as, fire, theft of data or general theft.

It is always advisable to thoroughly research the topic and talk to a professional before deciding to go with a particular insurance policy. Make sure that the policy is a right fit for your business and be sure to discuss all the coverage possibilities that you can take out.

You might also find our employers liability insurance or our professional indemnity insurance pages useful

What does business interruption insurance cover?

Business interruption insurance covers:

• The amount of income your business would have earned over for the duration that the location is unsuitable to use. This is fixed by an insurance company on a case-by-case basis. As previously mentioned, the amount of compensation you are likely to receive depends on your company’s previous financial records.
• The costs and expenses incurred while your business is waiting for the location to become usable again. These costs will also be related to your company’s historical financial records.
• Losses due to sudden personal incapacity
• Losses due to a sudden and unforeseen natural disaster (e.g. flood damage, fire, storms)
• Losses due to local government action (e.g. road works)
• Losses due to theft and vandalism
• IT failure

Business interruption insurance will also cover your business if you are forced to move and operate from a new location. While Business interruption insurance is a very useful policy for a business to take out, it’s important to remember that this particular type of insurance policy is unlikely to provide your company with financial compensation for a long period of time. Most business interruption insurance policies will cover a period of a few weeks or a few months at the very most.

Small business owners need to remember that business interruption insurance are only for times when the company is unable to do business – not because they are having a difficult time because of the wider economic climate. You should also remember that if you put in a claim, it is likely that HM Customs and Excise will want to audit your business so you should be prepared to file lots of paperwork if you want to make a claim.

Business interruption insurance should be considered as a key policy to have if you are running your own business. You never know when your business might be in trouble and this policy will certainly elevate some of your stress.

If you have found this article on business interruption insurance then you might also be interested in reading our articles on employers liability insurance and key man insurance.

An employer will take out life and health insurance policies on any employee that is essential to the organisations day-to-day running. The person could be considered as having a special skill or intimate knowledge of the company or be considered as “uniquely valuable” to the business.

Keyman insurance falls into four main categories. These are:

1. Key people – pays money when your key personnel are unable to work or to train/recruit a replacement

2. Protect profits – cover to protect profits (an example would be if your top salesman dies in a car crash)

3. Protect shareholders and/or partners – cover to protect shareholders or partnership interests, and

4. Personal loan guarantees – cover for anyone involved in guaranteeing businesses loans or banking facilities

A business will have to decide on who actually is a key person within the organisation. Following this, a company will then need to understand the value of that particular person to the company. This is something that will be decided upon with your insurance provider.

There is a key difference between keyman insurance and life insurance or critical illness insurance and other policies like employers liability insurance and professional indemnity insurance. Life insurance and critical illness insurance are both personal insurance policies, while key man insurance is corporate policy where a company pays the premiums and in turn receives the financial compensation should the policy pay out.

Key Man insurance is particularly important for small businesses with fewer than 10 employees. Every business should have a plan for how to cope without a key employee. Keyman insurance could be one of the most important business decisions you make.

Which businesses need to take out professional indemnity insurance?

Many businesses are required to take out Professional indemnity insurance. In many countries, legal and medical professions are required to take out professional indemnity insurance, however this type of insurance could also apply to consultants, accounting or financial services and those in information technology.

What are the types of professional indemnity insurance?

There are three basic types of professional indemnity coverage. The first type will cover the business caused by negligence or error in their business. This policy only offers the most basic of insurance for any business. The next type of coverage available will protect the policy holder against any loss as a result from breach of duty. Finally, the other type of insurance cover available will protect an insurance being insured against any civil liability.

How much professional indemnity insurance cover does a business require?

The amount of cover that a business needs will depend on the size of the business and the type of services it provides. It is advisable to think about the value of the work you are doing for your clients and the potential financial impact on them should it go wrong.
There will often be times when a client will set a minimum amount of professional indemnity insurance cover they require a business to have before they will agree to work with them. For example, often UK governmental departments will require a business to have at least £5m in cover before they will agree to work with them.

In order to ensure that your business is not taken to court then it is a worthwhile to endeavour  to draw up a contract with your clients before you begin work on a project. Make sure that you set out your responsibilities clearly in any document and keep copies of your agreements for future reference.

If you are a small business owner you may also be interested in the following articles:

Product Liability Insurance
Public Liability Insurance Cover
Employers Liability Insurance
Types of small business insurance

Product liability insurance will also cover your business against any unforeseen circumstances such as, product faults that were beyond the control of your quality control system assessment. However, should you make an inferior product you may be unable to make a claim as bad workmanship is not covered by the policy.

Claims against product liability insurance are usually broken down into three basic categories which are as follows:

• manufacturing or production flaws – this claim argues that a part of the production process caused the product to become unsafe
• design defect – this claims contends that the product’s design is unsafe by nature.
• incorrect warnings or instructions – this claim states that a product didn’t come with the correct instructions to avoid causing harm or misuse of the product

What does product liability insurance cover?

A business is legally responsible for any damage or injury that a product causes. A business must ensure that its products are “fit for purpose” and are safe to be sold on the market.

You may still be liable for a faulty product even if you haven’t manufactured it. You will liable for the product under the following circumstances:

• your business’ name is on the product
• your business repairs, refurbishes or changes the product in some way
• you imported it from outside the European Union
• you cannot clearly identify the manufacturer
• the manufacturer has gone out of business

The manufacturer is liable for the product is none of these conditions are met. However, you will also have to show:

• that the products were faulty when they were initially supplied to your company
• that you provided customers with safety instructions and warnings about the misuse of the product.
• that you included terms for return of faulty goods to the manufacturer or processor in any sales contract you issued to the consumer
• make sure that your supply contract with the manufacturer or processor covers product safety, quality control and product returns
• have good quality control and record-keeping systems

Which businesses need product liability insurance cover?

What type of company needs product liability insurance? Any company that provides products to the public need this type of insurance. Whether you are a toy company, café or restaurant you will need this cover. Often this type of cover is included in the standard commercial liability coverage or in the business owners policy. However, it is important to check to see if this is the case.

You may also be interested in learning more about employer’s liability insurance, public liability insurance or the various types of small business insurance available.

What type of company should take out Public Liability Insurance?

If your business brings you into contact with members of the public then you should seriously consider taking out Public Liability Insurance cover. This type of insurance will protect your business if you are on their property or they come to your premises.
Generally speaking, any company that is likely to come into regular contact with the general public should consider taking out this policy. If you a builder, a plumber, an electrician or work in the construction industry then this policy will help protect your business.

Who is required to take out Public Liability Insurance?

Despite Public Liability Insurance being a very useful policy for many businesses to consider, a company is not legally obliged to take out this policy. The only exception to this rule are horse riding establishments as under law they are required to take out Public Liability Insurance cover.

How much will Public Liability Insurance cost a business?

Public Liability Insurance cover is based on the type of business and rated on an estimate for the level of activity of the business. This estimate will usually be deduced from a business’s turnover. Typically, a small business will be required to purchase £1 million of public liability insurance cover. While this might seem like a large amount this type of insurance will not usually have high yearly premiums.

Before you agree to taking out any policy it is essential that you check that your business is covered for the right things. You need to check that you are covered for everything you need to be covered for. It is also vital that you check for any exclusions in the contract. While a business might be able to get cheaper cover, it is pointless taking out a cheaper policy if it doesn’t cover you for events that may cuase damage to your business.

Don’t forget that there may be other types of small insurance policies that a business might need to protect themselves like Employers Liability Insurance

Employers Liability Insurance policy covers your small business in the event that an employee is injured while at work. This policy protects an employer from any liabilities that relate to diseases, fatalities or injuries that are acquired as a result of workplace conditions or practices.

Employers Liability Insurance allows businesses to meet the cost of any damages or legal costs of employees who are ill or injured through the fault of the employer.

Are All Businesses Required To Take Out Employers Liability Insurance Cover?

It is a legal requirement for any employer to take out the Employers Liability Insurance policy.  There are a few exceptions to this rule, such as, if you are a sole trader and do not employ anybody else apart from close family members in your business.
By law any business that has employees is  required to take out an insurance policy that covers the business for £5 million, however, most insurers will automatically offer a business £10 million in cover.

An employee is usually defined as follows:

• they are under a contract of service
• you deduct National Insurance contributions and income tax from the salary you pay them
• you control when, where and how they work
• they cannot employ a substitute when they are unable to work

Other legal requirements

After you take out this compulsory insurance policy you will be required to display a copy of the certificate where employees can easily read it. This can be a paper copy on a wall or a digital copy placed on the company’s intranet. If you fail to produce a valid certificate to the Health & Safety Executive (HSE) then you will be fined up to £2500 for each day that you fail to have insurance cover.

It is also recommended that any employer keeps a copy of their Employers Liability Insurance policy for as long as possible. This is because some diseases often take years to surface and a business could be forced to meet the costs of the damages if they cannot prove they were insured during the period that the employee contracted the disease.

While some small business owners may dislike the idea of paying for Employers Liability Insurance, it is necessary by law and will help to ensure that your business continues to function if an employee claims for damages or legal costs.

It’s little wonder most start-ups are so confused about insurance. Small business insurance is a broad subject so it can be difficult to know where to begin when searching which small business insurance policy is right for your company. It is helpful to remember that all policies will pertain to the following there areas of risk:

• Liabilities (Public Liability Insurance, Employers Liability Insurance etc)
• Property and buildings
• Business assets and equipment (contents cover)

It’s useful to look at those broad topics as a framework for understanding which insurance policies you are likely to need for your business. By indentifying the risks to your business you have a much better chance of purchasing the right cover for your organisation.

While you will need to select the right policy to suit your business, you should also be aware of the fact that you are obliged by law to take out certain insurance policies.

Listed below are the types of small business insurance you may need depending on circumstances.

Employers Liability Insurance

Employers Liability insurance covers the cost of any damages or legal fees for any employee who is injured or ill through the fault of the employer. You are legally required to take out an Employers Liability Insurance policy if you employ more than one person in your organisation.

Public Liability Insurance

If you are likely to come into contact with the general public then Public Liability Insurance will cover a business from the risk of causing injury or harm to the person or property of a third party.

Product Liability Insurance

Product Liability Insurance will cover your business against any damages caused to a third party (this can be either a person or a property). If you export goods or supplies then this is an insurance policy that your company should consider.

Professional Indemnity Insurance

Professional Indemnity Insurance covers the claims and legal costs for a third party if there has been any negligence or mistakes made in relation to one of the services provided by your business.

Key Man Insurance

Key Man insurance will cover you against losing a key person in your company as a result of critical illness or death. The payout will often be set in advance and will be an approximate estimate of the financial loss to your business if you lose a key member.

Business Interruption Insurance

Business Interruption Insurance will cover your business in the event of any disaster or continuity arrangement. The business will take out this cover and be able to restore the business to the operating levels before the disaster strikes.

Commercial Vehicle Insurance

Commercial Vehicle Insurance is another mandatory legal requirement if you have any vehicle belonging to the business. There are many different types of Commercial Vehicle Insurance including van insurance and temporary car insurance.

Property and Buildings

Most general policies will cover premises belonging to the business for the following areas of risk: fire and lightning, explosion, riot, malicious damage, storms, floods, and damage caused by vehicles.

Business Contents Insurance

While the Property and Buildings insurance will only usually cover the actual premises of a business, you will need separate cover to insure the contents and stock of your business. If you need to cover the actual contents of your building then you need to take out a Business Contents Insurance policy.