I know insurance might not be top of the list when you’re setting up a new business, and it’s not easy to get excited about buying insurance, but it could be the very thing that ensures the success of your business if something goes wrong, as sadly, sometimes things do go wrong.
Here are seven reasons you need to make sure that you have the right insurance in place as soon as possible.
1. You have a team of people
Employers Liability Insurance is a legal requirement if you employ staff and provides cover if a member of staff suffers injury or illness as a result of their work. If you only employ close family members you may be exempt.
Employers Liability Insurance is on a ‘claims occurring’ basis and not a ‘claims made’ basis. This means that if a claim is notified to you which happened a few years ago, it is the insurance policy that was active during that year that will pay out, not your current policy. Therefore, it is important to maintain a record of who has held your employer’s liability insurance so that claims can be redirected quickly.
The legal minimum limit for this cover is £5 million but most insurers will offer £10 million as the standard minimum limit.
2. Your business involves giving advice
Professional Indemnity Insurance is vitally important if you provide advice to other people and/or businesses. This type of cover is designed to protect you if you provide your customers with incorrect advice which results in them suffering a financial loss that could lead to them raising legal action against you.
Within the terms and conditions of the policy, Professional Indemnity Insurance would cover the legal costs and compensation. A claim against you could arise if someone alleges that one of your coaching courses doesn’t give them the result they were hoping for, or perhaps you have designed or measured something incorrectly and they feel you are at fault. This does not mean you are at fault, but the insurance will help you defend yourself against such allegations.
Professional indemnity insurance also provides cover for defamation, copyright infringement, and breach of confidentiality, which are particularly useful if you are publishing a blog or regular content online. (See 4. Below)
3. You rely on computers to run your business
Cyber Insurance is vital if you use a computer or the internet to run or support your business, have a website, or social media accounts, or use email marketing. The number of incidents where attackers use a computer to commit a criminal offence is on the rise and a Cyber Insurance policy can help. You could potentially suffer a data breach or a computer virus infection or a hacker could hold you to ransom. The insurance can cover the cost of removing these infections and provide cover for consequent loss of income. Additionally, insurers can also include access to professional Cybersecurity Consultants and PR experts to help minimise the damage to your reputation which a loss of data could cause your business.
4. You publish content online
As mentioned in 2. above, Professional indemnity insurance also provides cover for defamation, copyright infringement, and breach of confidentiality.
This type of insurance would cover the legal costs and compensation, within the terms and conditions of the policy, if a claim is made against you. This could happen if a client claims that one of your downloads contains an image you don’t have permission to use and they felt it has caused them to suffer a financial loss, or if a competitor feels you have said something defamatory about their product in a tweet or blog post which has damaged their reputation.
5. Your reputation is on the line
Directors and Officers are personally liable for making a mistake. It is often assumed, incorrectly, that the individual directors of a company are not personally liable for mistakes made, but even in a Limited Company, the personal liability of the individual directors is unlimited.
Directors and Officers are under increasing scrutiny, and allegations of mistakes can often be made. These mistakes are called “wrongful acts” and include breach of trust, breach of duty, neglect, error, misleading statements, and wrongful trading by a Director or Officer whilst acting on behalf of the company.
Directors and Officers (D&O) liability insurance protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.
6. You have lots of expensive kit
Business Contents Insurance can protect the possessions and equipment on your work premises or elsewhere. A typical Business Contents insurance policy will cover damage or loss to furniture, tools, computers, and other equipment as a result of various perils including fire, flood, or theft but can also include accidental damage or malicious damage. You will need to add up the total cost of replacing all your contents to establish the sum insured you need.
7. You want to grow your business
Having the right insurance in place to protect your business and your cashflow demonstrates to new clients and investors that you’re serious about what you do. It will also help if you are attending events or exhibitions where having your insurance, particularly public liability insurance, is vital.
What Next
If you need help arranging business insurance, find your local Broker via: https://www.biba.org.uk/find-insurance