A Guide On Insurance Policies For Your Business
Nov 1 2016
The need for insurance is therefore fundamental for your business to mitigate any risk from any unforeseen incidents or occurrences. Insurance can understandably be a tricky subject to get your head around, so as a commercial property agents, we decided to produce an insightful guide on all the different types of insurance that your business should definitely be considering. Of course, some insurance policies may be more relevant to your business than others.
Business Property Insurance
Regardless if you lease or own your premises, business property insurance is vital. The policy covers any damage or loss to business property in scenarios such as theft, vandalism, fire or adverse weather conditions (storm, hail, lighting etc). ‘Business property’ is usually defined by the entire building, signage, equipment, furniture, documents and any inventory.
The level of coverage can often vary between different policy providers; therefore, it is imperative that you check the things you expect to be covered are included. Certain destructive natural events such as mass flooding may not be included under standard business property insurance cover, consequently you may have to consult with your insurer to take out a separate policy.
Employer’s Liability Insurance
Whether you have full-time, part-time or temporary employees, you are legally obliged to have employer’s liability insurance. If you do not take out the protection, you could be fined a tear-shedding £2,500 every day until you finally get covered. It does not only protect your employees but accompanies your businesses health and safety practices.
If one of your employees is injured or ill because of their work, they could seek compensation from you. Payments could potentially be very large, depending upon the seriousness of the injury or illness. The policy will bear the cost of any compensation that needs to paid out alongside the associated legal costs.
The only instances where you do not need employer’s liability insurance is if your business has no employees or it’s a family business, which only hires family members.
Commercial Motor Insurance
If your business uses any vehicles (cars, vans, trucks or lorries) to carry out deliveries, collections or call-outs - then you are legally obliged to have commercial motor insurance.
Commercial motor insurance is totally different from personal motor insurance. Don’t falsely assume your personal motor insurance will also cover all your business vehicles, it’s not designed nor intended for that. If you do, your business vehicles will be on the road uninsured.
There are three main types of Commercial Motor Insurance:
Third Party – This is the minimum cover required by law. Whilst policy details differ from insurer to insurer, all third party polices cover you from costs which arise as a result of injuries to others or damage to their vehicle.
Third Party Fire and Theft – Provides the same coverage as third party polices but with the added protection against your vehicle being stolen or destroyed/damaged in a fire.
Comprehensive – It covers everything that the third party policies provide, but with various additional ‘protections’ included.
All three parties cover your business, regardless if it is your drivers or the other drivers fault.
Product Liability Insurance
If your business designs, produces and supplies a sellable physical product, then your business should ideally have product liability insurance. If your products do turn out to be faulty, your business will be legally responsible for any injuries or damage caused (to any person or their property).
The policy covers the cost of compensating anyone who has adversely been affected and has decided to make your business accountable for the faulty product(s). Depending on the product, policy coverage does vary. For example, medicine companies are going to be subject to higher product liability risks than a sports equipment or clothing manufacturer.
Even if your business does not produce its own products, you can still be held liable if:
The product has your businesses name on it
If you imported the product from outside the European Union (EU)
Your business takes responsibility for repairing, replacing and refurbishing products
Public Liability Insurance
If your business is consistently interacting with any third party that is not your employee than you should very much consider getting public liability insurance as a precaution. If you are regularly visiting or clients and customers are consistently coming to your premises, the policy guards you against any claims of compensation from them if they suffer any injury or if their property has been damaged because of your business. For instance, a visitor dislocating their shoulder or damaging their knee ligaments as a result of a tripping on a loose floor board or slippery rug in your premises could decide to sue you.
Whilst claims may seem far-fetched to you, without public liability insurance, paying out thousands in compensation could cripple your business.
Even though polices vary from insurer to insurer, most public liability policies include:
Any incidents that happen on your business premises
Any incidents that happen at events, functions or activities directly hosted and organised by your business
What About Home Businesses?
If you have a home business (without owning or leasing any premises elsewhere) than your standard home policy may not be sufficient to protect your home property from any potential risks or hazards.
Your insurer is the one who is agreeing to protect your home therefore their expectation is to truthfully know what they are guarding it from. If your home business has not been disclosed and in the undesirable situation your business property (equipment, inventory etc) gets stolen, then your insurer has every right to refuse or reduce your claim.
The recommendation is to contact your home insurer for additional insurance to cover your businesses equipment, inventory, documents and furniture in the event of an unanticipated problem/occurrence.
What Questions Can You Except Insurer’s to Ask?
So you now have a sound understanding of the different types of insurance available to your business. Two of the mentioned (employer liability and commercial motor insurance) are legally required, whilst the others are optional but provide added peace of mind. When speaking to different insurers about taking out a policy they will ask you a certain set of questions which typically include the following:
What type of business are you?
The size of your business?
The length of time you have been in business?
Where your business is located?
The number of people your business employees?
Your employee turnover?
The businesses health and safety record?
The level of exposure your business has to clients and/or customers?
If your business has had any previous claims?
How much cover does your business need?