Whilst there are some elements of business insurance that are required legally, there are also many additional options that may seem as though you are paying over the odds while your business is running smoothly. That is of course until you are faced with a situation where you are thankful to have the financial backup provided by good business insurance. Whilst it would be nice to predict the future, no one can tell when these disasters may strike, and it is much more comforting to know you can carry on with business as usual in such situations.
Here Doug Kelly, Director of Bluedrop Services insurance brokers, discusses some of the main benefits of having business insurance and why is it needed.
Providing protection against being sued
If you are unfortunate enough to find yourself caught up in a liability claim, business insurance will cover the significant costs involved. Even if you are not at fault the cost and damage to your reputation could be fatal to the continuation of your business. Whether it be from an accident, disgruntled employee, or a product safety issue, there are so many potential scenarios that can land you in this situation particularly with liability claims being so common these days. As any astute business owner knows, operating without insurance isn't a risk worth taking.
Keeps your employees protected
Whilst you do legally need to keep your employees protected with employer’s liability insurance, it is also important to remember they are your best asset and deserve additional compensation protection. Employer’s liability insurance doesn't just protect those on your payroll, but also covers any contractors, interns or freelance staff while working at your offices too. It's worth noting, when taking out this policy that employer's liability insurance is a legal requirement and that £5 million is the legal minimum cover level for employer's liability insurance.
Good business insurance and additional benefits such as health insurance will help to keep your team in good health as well as attracting and retaining your staff. Perhaps there are also key personnel that you should consider insuring individually should something happen to take them out of the picture when their presence is crucial to the business.
Some client contracts will demand it
If your business provides a professional service, there may be some clients that will require you to have specific insurances such as professional indemnity insurance. This provides them with the peace of mind that they will be compensated should anything go wrong or they be advised incorrectly. It provides a guarantee that you have the financial means to back up your professional work and makes relying on your services less of a gamble. Professional Indemnity, otherwise known as Errors and Omissions insurance, will ensure you are covered for legal and defence costs as well as court costs and any settlement fees that may be involved.
It can help prevent business closure
In the event of a disaster or claim, business insurance will help to recover your property and equipment whether it be from natural disaster or theft. Often it can take months or even a couple of years to recover following this type of disaster and in those situations business interruption insurance will cover your loss of income during the period it takes to get you back up and running. Without this, many businesses (up to 40%) fail to re-open.
Business interruption insurance is a key component of any business continuity plan. Whilst your standard commercial insurance will cover you for your premises and contents should disaster strike, business interruption insurance is there to cover your loss of income suffered during the period it takes to get you back up and running.
Protects your physical assets
All too often a business can suffer loss from natural disaster such as burst pipes or weather damage or even theft of your equipment. With a good insurance policy to cover your buildings and contents insurance you won’t need to worry about replacing or repairing your much needed and relied on assets.
Whether you run an office, retail outlet, pub, restaurant, hotel or factory, the value of your business contents is likely to be substantial, with a great deal of your assets being tied up in your premises. If these assets aren’t insured correctly, this could affect the day to day running and the immediate revenue of your business.
Properly insuring your business will mean you can rest easy knowing you are protected. By approaching an experienced broker they will ensure you are fully covered, have access to top rated insurers and can guarantee you aren’t paying over the odds.
For more information read our guide to deciding the right level of business insurance.