By Janet Jack, Finance Director, FSB Member Services
In the midst of your flourishing business ideas, exciting client meetings and ambitious future plans, making sure you have the right insurance is probably something that inadvertently slides down to the bottom of your ever-growing priority list. However, it is in fact one of the most important aspects of setting up and sustaining your business.
It’s easy to think that bad things happen to other people and that you will never be affected by unfortunate events but in reality, issues and incidents happen to the best of us. Usually when you least expect them.
With this in mind, it’s a good idea to start thinking about your worst case scenarios and making sure you are fully prepared for every eventuality.
So what insurance do you need?
Our advice is to start by establishing the minimum insurance cover you require and this will depend on the size of your business. To do this, you need to ask yourself the following questions:
Do I have staff?
Do I sell products?
Do I operate machinery?
Do I have business premises?
If the answer is yes to any of the above, then read on…
Let’s start with Employers’ Liability Insurance. There are just under 400 deaths and nearly 30,000 major injuries at work each year in the UK, so you need to be cautious. If you employ anyone, even if it’s your mother, the law clearly states you need Employers’ Liability Insurance.
As an employer you are responsible for the health and safety of your employees while they are at work. They could be injured or may become ill as a result of their work while in your employment. The end result is that they could try to claim compensation from you if they believe you are responsible. The Employers’ Liability (Compulsory Insurance) Act 1969 ensures that you have a minimum level (currently £5 million) of insurance cover against any such claims. It is however worth taking a good look at the type of risks and liabilities that you could face as it may be advisable to increase your insurance cover should the worse happen.
Liability insurance basically covers business owners, independent professionals and self-employed people against the cost of compensation claims made by employees. You do also need to consider the cost of potential claims made against you by members of the public.
If your business involves you manufacturing, designing or selling products, you need to have Product Liability Insurance. Your latest range of soft toys may seem harmless to you, but you never know when that teddy bear could turn to the dark side! This type of insurance policy covers the cost of compensating anyone who is injured by a faulty product as your business could be held legally responsible for any injuries to people or damage to property caused by a faulty product. It’s worth noting that your business could be held liable for faulty products even if you didn’t manufacture them. If your business’s name is on the product or you repaired, refurbished or imported the product from outside the European Union you could still find yourself liable.
In most cases a business will start at home before you experience growth and your empire takes off. Once this happens and you relocate from the spare room to operate in your own business space, you will need to invest in a couple of policies to protect your business. Firstly Property Insurance, like buildings insurance at home, will cover you in the unfortunate event of a fire, flood or theft.
The second type of cover you need to look into – if you own the building – is Property Owners' Liability Insurance. This enables you to meet any costs and damages awarded to a member of the public if they suffer an injury following an accident on, or linked to, your premises.
Finally, a business continuity plan is vital. Most businesses don’t usually survive after a major disaster, but if you plan well, you can dust yourself down and get back on your feet. Business continuity planning is all about identifying parts of your business that you simply can’t function without such as IT, stock, premises, staff and planning how to carry on if an incident occurs. Any incident, be it natural, accidental or deliberate, can cause huge disruption to your business. But with foresight and clever planning – rather than waiting for it to happen – you will ensure your business can continue to function in the quickest time possible.
Tim Lazenby, Managing Director of FSB Insurance Service, comments: “Some of the main things you need to plan for are potential accidents and risks to your staff and the public being injured, awareness of potential property damage and eventualities that could impact the day-to-day running of your business. Once you have an idea of the consequences of each eventuality you will be ready to speak to an insurance expert to obtain the necessary cover.
“Having the right cover demonstrates that you are a reputable business which takes health and safety and business continuity seriously, and more so that you fully understand your own responsibilities and requirements.
“The moral of the story is most definitely plan for the worst and ensure you have the right cover in place.”