Business insurance is often talked about as a catch-all product that covers every claim or requirement a business might have.
But in reality, it’s a series of products that are usually combined to build a policy that’s specific to the individual business and its needs.
This makes business insurance highly flexible and adaptable to any business, from the newest, smallest start-up, to the largest most established national company.
But because it’s built from several insurance products, business insurance can get confusing, especially for complex businesses with very specific cover requirements and protection needs.
The most common factors that will impact what level of business insurance cover a company needs are usually:
- The company size
- Whether it has employees (and how many)
- The industry the company is in
- The type of work the company does
- The regularity and level of interaction with the public
- What equipment they have
- What products they deal with
It’s also becoming more common for cyber security to fall within the scope of business insurance as more companies become aware of the risks of hackers and online criminals.
Sometimes even things like the location of the company can impact the level of insurance they need.
And while most business insurance policies are bespoke to an individual business, many will have at least a couple of the same basic levels of protection and cover.
Employers’ liability insurance
This is a legally required type of insurance if a business has employees.
The type of employee doesn’t matter.
Whether they’re full-time, part-time, voluntary, or temporary or contract workers, if they’re employees then the business will need Employers’ Liability Insurance.
If you’re a sole trader or a one-person business then you won’t need this.
However, if you do need Employers’ Liability Insurance and you don’t get it, you could end up facing fines up to £2,500 for every day you’re not properly insured.
You could also face fines of £1,000 if you fail to display or present a liability certificate if requested by an inspector.
Employers’ Liability will help a business cover the costs if an employee makes a claim for injury or illness at work, or dies at work.
As a minimum, your Employers’ Liability should cover you for £5m according to the Government.
It must also be bought from an authorised insurer.
Public liability insurance
Very few businesses have no contact or interaction with the public at all during the day.
If you do come into contact with the public, there’s always a risk you could face a claim for injuries, illness or damage to property as the result of yours’ or your business’ action.
Public liability can help you if you do face a claim.
It can cover the costs involved with any legal action against your company if a member of the public claims they’ve been injured or suffered loss or damage to property, or income, as a result of negligence by your business.
Every business should consider getting some level of public liability insurance for the peace of mind that they’ll have financial cover just in case they do face a claim – no matter how unlikely they feel it would be.
Commercial property insurance
If you have a commercial premises then you definitely need to consider commercial property insurance.
This will protect property and contents and provide financial cover for losses due to damage by an incident like fire, flooding or any other accident.
Just be aware that it will only cover the costs of the damage caused by the accident and repairing or replacing the damaged property or equipment.
This won’t cover the market value of the property, only the costs of repairs or new building work.
Even if you run a business out of your home – something that is becoming more popular – you can still get some level of commercial property insurance.
Most businesses choose to package commercial property insurance with public liability insurance so they’re covered for injuries to the public when on their commercial property.
For manufacturing businesses, or any business that is reliant on machinery or tools to do their work, damage to or loss of that equipment can cause massive disruptions to daily operations.
Particularly if the equipment is expensive and difficult to replace.
Equipment insurance can help cover the cost to replace any damaged, lost or stolen equipment quickly so a business can get back up and running as fast as possible.
Standard equipment insurance only covers the costs of claims for damage to equipment inside the workplace.
If employees work on client sites, or regularly use machinery or tools away from the official place of work, then adding ‘all risk’ to the equipment policy can help cover the costs associated with repairing or replacing equipment damaged or lost anywhere.
Any business that manufactures or sells products to other businesses or members of the public should have product protection as part of their wider business insurance.
Product insurance covers any costs (including potential compensation payouts) if a buyer is injured, becomes ill or dies as a result of using the products.
Many businesses who buy and sell products from third parties are often under the impression they don’t need product insurance.
But this isn’t the case.
As the final seller of the product, you could still be potentially found liable in any legal action or claim for compensation.
If you don’t have the insurance in place then the business could be subject to a massive financial loss in the case a compensation claim is successful.
Product insurance also helps cover costs associated with claims around damage to property caused by products.
Business interruption insurance
This is often overlooked by many business owners because they misunderstand what other types of cover they get in particular products like commercial property insurance.
They don’t realise that something like commercial property insurance only covers a business for the costs to repair property damaged by a disaster.
But what about the loss of income you might suffer if the accident means the business can no longer trade while repair work is going on, or equipment is replaced?
This is what business interruption insurance is for.
It covers the costs of any lost profits a business may suffer if they can’t trade as a result of a particular situation.
It can be quite strict on what a business can get a payout for.
Any claim has to be linked to the incident that has caused you to cease trading.
For example, part of a claim if a fire renders your office space unusable and you’re unable to trade.
Goods in transit insurance
If a business regularly transports goods then goods in transit insurance can cover the costs of any loss or damage to the goods from an accident, or if they’re stolen.
It will only cover goods transported in vehicles owned by the named company on the policy.
It can’t be used to cover damage or loss of goods caused in a personal vehicle of an employee.
Commercial fleet insurance
If a company has multiple vehicles registered to it (like a taxi company or courier service) then it could be costly and complicated to insure each vehicle individually.
It also creates problems because only the driver on the individual insurance policy can drive that designated car.
However, commercial fleet insurance allows companies to insure every vehicle in their fleet under a single policy.
The basis is the same as a regular car insurance policy and includes different levels from comprehensive to third party, fire and theft.
It just extends the cover to every vehicle in the fleet registered under the policy, and means any driver can drive any insured vehicle on the policy.
This allows businesses to be more flexible when people are off due to holidays or illness without worrying that they’re sending uninsured drivers onto the road.
Fleet insurance can either be used to cover multiples of the same vehicle, but can also cover multiple types of vehicle under the same plan if needed.
Choosing the right business insurance cover
While many business insurance products are offered individually, the final business insurance policy will be made up of several different products based on the need of a particular company.
This is why businesses should put serious thought into all the insurance and cover they might need.
The consequences could either end up with a business overpaying for levels of business insurance it doesn’t need or, possibly worse, a business operating without the proper level of insurance and facing massive legal and compensation bills if a claim is made against them.