Buying Guide: Business insurance – everything your business needs

At the time, the main threat to business was damage to marine and cargo, so it is hard to imagine that Edward Lloyd could ever have anticipated the kind of the threats facing businesses in today’s modern world.

As the risks to business change and adapt to reflect new practices and opportunities, so too does the need for more relevant insurance products. From cover to protect against professional mistakes through to cyber attacks, business insurance is more important than ever, particularly for small businesses. Insurance has become key to helping to mitigate some of today’s most costly business risks.

With more insurance options available than ever before, it can be a challenge for a small business to decide which insurance is best suited to its needs and we asked Deepak Soni, a small business insurance expert at Hiscox to explain the options that SMEs must have, should have, and also could do with having to really cover themselves.

Business insurance falls into two main categories. Firstly, there is compulsory insurance that all businesses must have, and secondly there is insurance that an SME should consider.

Claims of any nature against a business can be very costly. Having the correct insurance can for some businesses be the difference between being kept up and running in the event of a claim, or folding due to the financial burden of a loss. It’s startling just how many people will tick the first box because it is a regulatory requirement, but will skip the second optional one altogether and run their business without adequate cover to protect them.

If you are a small business the first step is to investigate the additional insurance cover you really need. Since cash flow is king it’s important to strike the right balance between costs and efficiency. Knowing what your business liabilities might look like and getting the right insurance product to give you the right protection will give you peace of mind, after all your protecting your investment, be it people, customers, property or reputation.

To a small business, one claim can be crippling. What happens if your business receives a claim from a customer for professional negligence? What if you have a computer stolen, then how are you going to replace it? Can you afford for such risks to impact your bottom line? Or would you feel more comfortable, and does it make more commercial sense, having insurance. It’s a matter of identifying risk and budgeting for insurance. An insurance expert can help you make that assessment, and support you with their expertise. A good insurance policy is like a having access to a team that can be part of your business protection, and recovery process.

Small business owners should consider:
Public Liability Insurance
Public Liability Insurance protects against a number of claims. It protects against where a business and its employees are held to be liable to third parties. This can be for bodily injury to a person, or damage to property. Looking at bodily injury, it protects against a claim arising from one of your employees actions’ at work which causes injury to a third party, such as a client or member of the public.

Property protection gives your business protection against claims for any loss or damage to third party property.

Whilst Public Liability Insurance is not compulsory and there is no legal requirement for an individual or business to hold public liability cover (except under special circumstances) it is often considered to be important business insurance. Just think about how times you or your employees visit customer’s premises and how many times they visit yours?

Employers Liability Insurance
The majority of employers are required by law to insure against Employers Liability for injury to their employees, including sickness or disease, arising out of their employment. If you are not a business where this insurance is compulsory, it is one to highly consider.

Professional Indemnity Insurance
Professional Indemnity Insurance is sometimes referred to as Professional Liability Insurance. This insurance, although not always compulsory by law is one that proves essential if a claim is brought against a business alleging mistakes. Mistakes happen but they don’t need to ruin a business.

Professional indemnity policies can protect businesses against claims for professional negligence or breach of duty of care. Where a business holds itself out to be an expert in its profession, and it charges for any expert advice given or service provided, it then owes a duty of care to the third party to deliver. In the event that the business (through its employees) neglect or breach this duty then a claim for compensation might be brought against it. Policies usually have a wide footprint of protection.

They can extend to cover negligent statements or misrepresentation, infringement of intellectual property rights (including copyright and trademark), defamation (libel and slander), breach of confidence or even misuse of any information which is confidential.

To illustrate lets take a scenario; the web design company that wasn’t! If a design company says it can design a website, and charged its client accordingly, then, in the event the site failed to look or feel as a website or as agreed, the customer may have a claim for compensation.

The customer might have a claim for negligence (that the design company failed to design the site professionally and in line with the brief). Professional indemnity insurance might provide protection against the claims, and losses.

Contents Insurance
As technology advances so does a small business’s reliance on it. Today there is a demand for instant information, connection to clients, and the ability to deliver electronically: there is no getting away from it. For businesses of any size the reliance on technology cannot be underestimated as it offers efficiency, speed and the capability to handle multiple tasks, which is very important when you have few staff or operate as a sole trader.

Contents insurance gives the business owner protection from the financial costs of replacing equipment. If contents are damaged, lost or stolen they are replaced or reimbursed through such insurance. Costs, which could be hard to cover out of your own pocket, or which might be significantly high and therefore crippling to a business, can be covered.

Insurances to keep an eye on
An increased reliance on new technology means new risks to business. The more online, digital and technology focused world in which business finds itself operating has driven the insurance industry to create new and more relevant products.

A relatively new product that is specific to businesses relying heavily on technology is cyber insurance. Cyber insurance covers a business in the event it experiences a cyber attack. For example, if your website is hacked and someone defaces it there will be a cost to restore it back to how it was. Cyber insurance cover can help to reinstate the website and get the business back up and running. In the event someone hacks your website and steals your customer database, cyber insurance gives specific cover to reconstitute the database.

Whatever type of business you have there will be risks. The type of risk and its potential for damage will vary across professions. The insurance needs for advertising consultants will differ to those of IT consultants therefore it is important to keep close to the overarching needs of your business. Ask yourself, is my business operating this year as it did last year? Have I diversified? Do I have new business risks that I need to consider?