When setting up a new business there are plenty of things you need to think about. What type of company your business will be (sole trader, limited, partnership), how your accounting is going to be done and what type of insurances you need. This guide aims to look at what every small business should know about the different types of insurances and where to get them.
The different types of small business insurance
There are four main types of insurance that small business will need to look into, depending on whether they have a property, employees and so on. Here are those four insurances in greater detail, including when to sign up for a policy.
Public liability insurance – If you come into contact with members of the public, which most businesses do, then it is likely you are going to need public liability. This insurance covers you when a member of the public becomes injured because of your business, or if their property is damaged by your company. If they wish to make a claim for compensation then you will be covered by public liability insurance.
Professional Indemnity – If you are a professional offering a service such as consultancy, designs or advice then it is likely you are going to need professional indemnity. If your client was to lose money because of your work, if it is late or not what they asked for, then they may wish to claim compensation. This type of insurance can pay out that compensation and any legal costs involved.
Employer's liability insurance – If you have any type of employee, whether they be full time, part time or on a short term contract, then you are breaking the law if you do not have employer's liability insurance. If an employee is to get ill or injured whilst working within your business then this insurance will cover you if they wish to claim compensation.
Property insurance – Very much like the contents insurance that you may have for your home, property insurance protects your company buildings and what is inside them. If you were to lose any equipment, tools or stock due to it being stolen or destroyed then property insurance will cover you. Make sure that you get a correct valuation on all of your contents before buying this type of insurance.
How to get small business insurance
There will be a whole range of companies offering small business insurance, so you may find you are spoilt for choice. The best thing to do is compare the prices and policies of each one individually to see which is best suited to your business.
When you know what type of insurances you need for your business, you may find that getting them all from one insurance company will be the most cost effective for you. Several companies will offer a discount if you take out a couple of policies with them.
Look through business support pages run by the government or charities (such as the Princes Trust) for the companies they most recommend when it comes to small business insurance.
Remember, not having some of these insurance policies could actually be breaking the law, so make sure you look into these and factor in the costs when writing up a business plan.
Jamie Danesh is a business and writer who after a decade in the industry enjoys sharing his knowledge in digestible ways. He recommends calling in the professionals should you require further financial advice.
