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By Lynne Gowers on 8th May 2017
Most of us have various types of insurance policy for our homes, cars, pets and for when we travel. In all these aspects of our everyday lives we hope for the best, but insure for the worst. The same should go for business insurance.
Whether you are a limited company contractor, freelancer or small business, it makes good sense to mitigate risk by having appropriate professional insurances in place.
Here is our guide to the essentials.
Business insurance is all about protecting you and your business should the worst happen. If a claim should be made against you, the right insurance could be the difference between sink and swim. If you are an employer, employers liability insurance is a legal requirement.
As well as your own peace of mind, business insurance offers reassurance to your clients. Indeed, many contracts require certain levels of cover as a condition of acceptance, so it is sensible to have policies in place from the get-go.
So let’s take a look at the various types of business insurances and why you would need them.
Essentially Professional Indemnity (PI) insurance is to cover you and your business against negligence. If you make an error in the performance of your duties or otherwise cause your client financial losses, they may put in a claim against you.
PI covers any damages you have to pay out as a result of such a claim and also your legal costs. Aside from negligence, bear in mind that this type of insurance covers loss of data or documents, intellectual property breaches and cases of libel or defamation.
When you take on a job or project there will often be a contractual obligation for a certain level of Professional Indemnity cover. It is worth checking the small print to make sure you and your company meet this requirement, otherwise you could be held personally liable if things go wrong.
Public Liability insurance covers against the risk of accidents or incidents which affect third parties, resulting in them making a claim.
Examples include damage to property, injury to third party persons and legal costs. Even very minor incidents can result in massive third party claims, enough to put you out of business several times over, so it is worth considering this type of policy carefully. Aside from that, most clients will insist on having Public Liability cover in place before you start work, in which case it isn’t really optional.
Employers Liability insurance is a legal requirement where your business has employees – including family if you are a limited company. It is often sold along with Public Liability as a combined policy.
Even if you are the sole employee of your limited company, often contracts use standard wording which makes Employers Liability insurance obligatory.
It is also important to note that this type of insurance will provide cover if you have a substitution clause in your contract or if you are employing a spouse or family member in the business.
If you are the only employee of your limited company and own more than 50% of the total share capital of the business, you may not necessarily require Employers Liability cover. However, it is always best to check with those in the know.
Depending on the nature of your business, your personal circumstances and your risks and liabilities, there are various other types of professional insurance you may wish to take out.
As with so much in business, it all comes down to the bottom line! The cost of business insurances varies according to several factors, including the size and nature of your business, your turnover and how many staff you employ. However, it is money well spent – the risks may be small but the stakes are high.
We have a number of insurance partners who fully understand the specific insurance needs of contractors and small businesses. They provide competitive packages and a fuss-free, friendly service. Contact us for details.
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