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Five things to look for when taking out business insurance
Last modified:What kind of things should you think about when looking for business insurance?
Here’s a good place to start.
No matter what kind of business you run it’s likely that you’ll need to think about taking out some financial protection…but where do you start?
Although you’ll want your monthly premium to be as cost-effective as possible, you’ll need to make sure that you’re getting the right level of coverage too. Try not to fall into the mistake of taking out the cheapest policy possible and then realising too late that it doesn’t offer you enough financial protection. So, what should you be thinking about before you start your search?
TOP TIP: If you have staff working for you then by law you will need to take out employer’s liability insurance, otherwise you could face large fines.
1. What kind of business do you run?
The type of business you do will make all the difference to the insurance policy or policies that you might want to take out. For example, a small shop selling goods will have a very different set of requirements to a driving instructor, and a large corporate firm will need different protection to a construction contractor. Whatever business you run, it’s best to try and find specialist policies that will help you to achieve the most appropriate cover and protect you against circumstances that are more likely to arise in your line of work.
TOP TIP: It’s common for most businesses to take out liability insurances such as employer’s liability insurance and public liability insurance.
2. What are the business risks?
Whether you deal with customers, sell a product, offer a service or even provide advice and guidance, there are many risks that you may not even consider. Try to think about your business in a wider sense, such as equipment you use, your vehicles, intellectual property and even the location your business operates in:
- Buildings insurance: if you own the property or building your business operates in, even if it’s your home, this could help cover repairs and even rebuilding costs.
- Stock insurance: if your stock is lost, damaged, destroyed or stolen it can be very expensive to replace without insurance.
- Cyber insurance: if you hold your clients’ details, data, or even sensitive documents and there’s a breach or leak, you could face expensive compensation claims.
- Professional indemnity insurance: if you offer advice or a professional service and they suffer losses or damages due to something you’ve said, they can sue you.
- Tools or equipment insurance: if your business relies heavily on your tools, such as a mobile beautician or plumber, then you’ll want to be able to make a claim and purchase like-for-like as quickly as possible.
REMEMBER: Some professions and regulatory bodies such as accounts and architects require you to have certain types of insurance policy in place, so make sure you’re covered for those.
3. How much cover will you need?
It’s a fact that each industry and business will have a very different set of associated risks, and so you’ll need to think about this when looking for policies. Trades such as construction, utilities and manufacturing all carry perceived higher risk factors and so it’s essential to look for policies that can offer sufficient sums should you need to make a claim.
REMEMBER: Always try to give insurers a true estimate of things like stock value, vehicle value and use and the kinds of employees you have, as false information could end up with claims being denied.
4. How can I keep monthly business insurance premiums down?
Depending on the type of business and insurance policy there are plenty of things you can do to show insurers that you’re taking your duty of care seriously and are trying as hard as possible to minimise risks. This could be things such as:
- Fitting work vehicles with extra security and removing tools or equipment overnight.
- Installing CCTV at your business premises and employing night security.
- Putting in place strict health and safety policies in place for employees, customers and the public.
- Carrying out regular maintenance on things like commercial vehicles, equipment and machinery.
- Make sure staff that are using dangerous equipment have all the necessary licenses and certifications.
TOP TIP: Insurers will often allow you to bundle together different types of policy to ensure you have the right level of coverage. Make sure you ask about this when purchasing your policies.
5. Would a claim result in downtime?
In some cases, a claim could result in downtime for your business which means you’ll take even more of a financial hit. For example, if you’re a courier and your vehicle needs to be repaired, you may not have access to a replacement, or, if a damaged step causes a customer to trip, you may need to close your shop whilst its repaired.
Business interruption insurance can help protect you against things like flood, fire and theft and claims and can help you cover the loss of revenue you suffer as a result.
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