Why do I need business insurance?
Business insurance is designed to protect you from the everyday risks associated with running your business. Your insurance needs are specific to your business. We'll help you understand why you need insurance and what type is best for your business.
Here are the top five reasons why you might need insurance:
1. You provide a professional service, handle client data or intellectual property. In this case, professional indemnity insurance might be prudent; covering you for claims made against you by a client due to errors in your work that have resulted in a financial loss.
2. You are required to do so as part of a regulatory body. This is a basic requirement in order to operate in some professions. For example, solicitors, accountants, and some healthcare professionals are required to have professional indemnity insurance.
3. You interact with third parties. Public liability insurance might be worth considering if you interact with third parties such as customers, clients, suppliers, or other members of the public. This covers you for claims made against you by one of these third parties. It is particularly important in cases where there is an increased risk of a customer being injured, e.g. a company offering adventure sports. Most retail outlets, food outlets, grooming, construction, and tradespeople take out this insurance.
4. You are an employer. Employer's liability insurance is a legal requirement in the UK for businesses that employee one or more employees. It is in place to cover workplace injury or damage claims made by a member of staff. Some companies may be exempt, including many businesses that only employ close family members. To check if your business is exempt, review Health and Safety Executive (HSE) guidelines or seek professional advice.
5. You have substantial investments in equipment, property, or inventory. A retailer may hold a large amount of stock. An architect may invest in technology or equipment. A restaurant would invest in ovens. Whatever the case, an insurance policy that covers buildings, stock or contents makes for a prudent investment.
The amount of business insurance you need depends on your specific business requirements and your risk appetite. It is worth noting that in some cases, you will need a specific type of insurance in place to sign a contract, depending on the situation and company.
The three most popular types of insurance come in the following brackets:
- Public liability insurance - ¬£1 million to ¬£10 million
- Professional indemnity insurance - ¬£50,000 to ¬£2 million
- Employers' liability insurance - ¬£5 million to ¬£10 million
How do I find the right provider?
Depending on your unique circumstance, one of the following three routes would be suitable to acquire business insurance tailored to your business needs.
- A trusted brand with high levels of customer satisfaction. We recommend Hiscox.
With over 400 feefo reviews in the last year alone, Hiscox has attained an excellent score of 4.6 out of 5. With approximately ¬£2.7 billion in revenue, Hiscox is also a very significant player in the insurance market. You would expect Hiscox to have quite premium pricing but policies are very affordable. Other advantages include:
- Policies tailored to your individual business. This can save you on cost, as Hiscox is able to price great policies for unique situations.
- Ability to report and manage claims online
- Claims handled quickly and efficiently
- Excellent 24/7 customer service
- Good website resources, including live chat, small business blog, etc.
- Rating of A (Excellent) from A.M. Best, A (Excellent) from Lloyd's, A+ (Strong) from S&P and AA- (Very Strong) from Fitch.
- Use a price comparison website. We recommend Simply Business.
A price comparison website is a great way to find the absolute best price (although keep in mind, price and quality are often related, so simply choosing the lowest cost provider without reading their reviews is not a good idea). Simply Business provide quotes from 16 of the largest insurance providers in the UK so is fairly comprehensive. Other price comparison websites (e.g. Confused, Moneysupermarket) use the Simply Business search engine so we recommend going directly to the source. Other elements that support using Simply Business include:
- It could save you money if you would like the cheapest (or near cheapest) price.
- It saves you time trying to get quotes from multiple providers. Price comparison websites offer all the information in one place.
- It gives you a broad range of choice from 16 different providers.
- It allows you to compare and contrast between different providers, thereby highlighting the specific weaknesses of some products.
- Try a customer-focused challenger brand. We recommend Tapoly.
While it has been operating for just three years, Tapoly has already won the Insurance Provider of the Year 2018 at The British Small Business Awards. Benefits of using a Tapoly include:
- Typically faster claims handling
- Online for everything
- Excellent customer service
Business insurance is one of those things that no one really likes doing or to think about, but when you need it, you can't imagine what would have happened if you did not have it. Invest some time to understand what kind of insurance you really need, and use Hiscox, Simply Business or Tapoly to find your policy.
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