Do I need Business Insurance - Startacus takes a look at the options

by Startacus Admin

Do I need business insurance - continued...

Public Liability insurance

As the name suggests this particular type of cover refers to members of the public.  For the purposes of its administration ‘the public’ refers to anyone from outside your business and excludes, yourself, your employees, your volunteers, anyone who is ‘lending you a hand.

The main purpose of this insurance is to protect you from claims should a member of the public  suffer an injury or loss / damage of property due to your business and its operations.  

For example, lets say you are running a restaurant. One afternoon a diner slips on a small piece of food and injures their elbow.  Your public liability insurance should protect you from any financial loss by paying any compensation, legal bills or medical treatment which is needed.  

Although this example is fairly minor, this type of insurance will also cover accidents which are much more serious.

As a general rule if your business has any direct contact with the public then it should have public liability insurance.

Employers Liability Insurance

Do you employ any staff?

If the answer is yes then you need to  have employers liability insurance, it’s the law.

Insurance protects you and your business financially against claims which may come from employees who are injured, become ill or (in some cases) file a lawsuit against you in relation to breaches in employment regulation.  

As was the case with its ‘public’ counterpart, this cover will also take responsibility for payment of any compensation or legal fees which can result from a claim.

For the exact requirements of UK employers, take a look at this sumary of the Employers Liability Compulary Insurance Act http://www.hse.gov.uk/pubns/hse40.pdf from the health and safety exective.

Business Property Insurance

This is basically the same as home property insurance and normally covers your business premises and its contents.  Coverage varies but generally it is used to protect against damage from fire, flood and theft and is designed to compensate you financially for the loss of / damage  which may occur to your business premises or its contents.  Unlike Employer Liability insurance, business property insurance is not required by law, however given that many businesses hold very valuable equipment and merchandise, not having any is quite a risk to take.

Furthermore in the case that your building and / or its contents are damaged you may be unable to operate your business fully whilst repairs take place.  To protect against such an event there is also a level of coverage known as ‘interruption insurance’ which will provide you with compensation whilst you find a new premises / repair your old one.

Professional indemnity Insurance

This is the most complex / unusual of the 4 main business insurance types because it does not refer to injury or damage to property but rather protects you from claims filed in relation to expertise provided by you or your business.

It is normally the reserve of businesses who deal mainly in the transfer of knowledge / advice including accountants, architects, solicitors, financial consultants etc.  

It’s a rather complicated area of insurance provision that could cover you for a range of legal claims such as; libel and slander, omissions, negligence, malicious falsehood, misrepresentation, errors, and unintentional breach of confidence.  

They are most usually used by businesses which can unintentionally cause their clients to lose money through the transfer of incorrect information.

Hopefully this little summary has helped to demystify the rather daunting world of business insurance. *Of course, we are not Business Insurance specialists, so do get professional advice before taking up any business insurance package. 

Remember that our fab business toolkit has a wealth of information for startups and small businesses- broken down into nice manageable chunks .  Check it out for advice on; concept, planning, research, development, finance, design, marketing and legal aspects.   

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Published on: 18th August 2014