What Insurance Do You Need When Running A Business?
The minute that you open a business of any description, you expose yourself to certain risks – and that is even before you hire an employee. For example, you could be making a product of some description and you make a mistake so that one of the products is faulty and as a result one of your customers suffers an injury. Or you are an accountant, and your client claims that you made an error which resulted in him paying far too much tax. You can have an ambulance-chasing solicitor breathing down your neck before you know it.
Most of those solicitors work on what is called a contingency basis, which means that they only get paid an agreed fee when the court has awarded the customer compensation, and that compensation comes from you. You will probably understand that solicitors don’t like to work for nothing. Quite the opposite: they charge hefty amounts. So, you can bet that it is very likely the court will award against you, otherwise the solicitor wouldn’t take the case on. This is why, as part of your office insurance, you need product liability insurance and professional liability insurance, also known as errors and omissions insurance to cover you against these types of claims. This will cover you for any compensation and legal costs involved if the court awards against you.
You also need property insurance. This will cover all of the equipment that you use – computers, copiers, filing cabinets, desks, chairs, and so on – against fire, storm, theft, accidental damage, etc. You might also want to include cover for computers for mechanical breakdown which can be built into the policy. However, it is worth noting that major events such as flooding or earthquakes are not usually covered by these policies, so if the area that you are based in is subject to these sorts of conditions you will need separate cover for this. At The Insurance Broker, we can advise you.
The instant that you hire your first employee, you also need employer’s liability insurance. This is a legal requirement, and it covers you for any injury or harm suffered by any of your employees while in the course of their work. Even if you are only an office-based business, an employee may trip over a cable or slip and fall while running upstairs. In this age of suing for anything, compensation claims can come thick and fast.
You may also want to cover for public liability. This will cover you for any injuries or damages suffered by a third party as a result of your operations. For instance, your employees may be delivering furniture to a customer and drop something from a height which hits a passer-by in the street.
If you use company vehicles, they obviously need to be insured for third party liability, but comprehensive cover is best as it covers for any damage suffered by the vehicle. If an employee is using his or her own car, that will be covered on their personal insurance, unless they are delivering goods or services for a fee, and this includes delivery staff.
Another very important consideration with office insurance is business interruption insurance. If something like a fire occurs, it can bring your business to a grinding halt while repairs are carried out – and this could be for months. You might be able to re-start elsewhere, but this will still involve a cost. Business interruption insurance covers you for lost income and so on.
One final word of advice: if you are working from home, you may think that your contents insurance covers you for office equipment and inventory. It doesn’t. You need additional insurance to cover you for this.