How insurance can help protect your small business and your family
Small business owners need to wear several hats, as such, they need to master everything from sales to accountancy, and beyond. However, one aspect of running a small business that often gets lost is insurance – notably the importance of having the right insurance policy.
Whilst professional businesses are largely required by law to carry some form of malpractice insurance, other small business owners might look at having insurance as a luxury that they can afford.
After all, why should they pay good money for coverage which they might never need? But this paints one side of the story when it comes to protecting a small business, as risks – or more appropriately, the potential loss from risks is often hard to measure.
As such, most business advisors recommend a “better safe, than sorry” approach to insurance. This means signing up for the right type of coverage based on the type of business and needs of its owners.
With that in mind, following are some insights on how insurance can help protect your small business and your family. These tips will give you some of the information needed to decide what is the right type of coverage for your business.
Employers' Liability Insurance
If you have employees, then you want to consider getting an Employers’ Liability Insurance policy for your business. This policy will cover losses tied to claims from an employee in cases where they are injured whilst on the job.
In most cases, a small business will be required to get a minimum of £5 million in coverage. This doesn’t mean that you will need to pay £5 million for coverage. Instead, you will pay the insurance company a nominal fee annually to provide up to £5 million in coverage.
Whilst the exact rate will vary based on what your company does and its history of on the job accidents, or worse; many companies will pay about £3,000 per year.
Commercial Vehicle Insurance
Does your business have its own vehicles, or do you or your employees use your private vehicles for business use? In either case, you will want to consider getting a Commercial Vehicle Insurance policy to protect yourself and your business.
In terms of the law, you are required to have third-party coverage for any vehicles owned by the business. This means that you cannot self-insure your vehicles – and why would you want to?
Having this form of coverage will pay for any damages if a driver of one of your vehicles was found to be at fault. However, you may want to consider more comprehensive coverage that would also cover damages such as fire, damage, or theft.
In addition, if employees are using their private vehicles you should consider getting a rider on your existing insurance policy. Even if they have their own car insurance, the added coverage will protect your business if your employee is found to be at fault whilst they are using their private car for your business, you might also be found to be at fault.
As such, you want to protect yourself as the potential damages could be ruinous for many small businesses.
Tradesman’s Insurance
If you are working in a trade, then you should get Tradesman’s Insurance. This is a form of Professional Indemnity Insurance specifically designed for those working in the trades. These policies provide specialised coverage for everything from workplace accidents to coverage on the work that you or one of your employees completes.
Even if you are the best at what you do, Sod’s Law has a way of gumming up the works. As such, protecting your work will ensure that your business and your family won’t have to face the full financial burden of a work-related loss.
This includes expenses that you mightn't have thought of such as legal fees and other contingencies. According to Darragh Timlin, Underwriting Director of Tradesman Saver, “companies often forget to include legal expenses insurance when arranging insurance for their business. All business owners need the comfort of knowing that 24-hour legal advice is on hand whenever they need it. Whether you have an employment dispute, need some tax advice or want some help drafting a contract for a supplier, there are many examples where legal advice could cost a small fortune. With legal expenses insurance, you will not need to pay for this help and support. Some insurers make an additional charge for legal expenses insurance but with Tradesman Saver, this cover is included as standard."
Other Forms of Insurance
Beyond these policies, you may want to consider Commercial Property Insurance, Business Interruption Insurance, Goods in Transit Insurance, and even Directors' Insurance. The latter would not only ensure your company has a source of funds if something were to happen to you, but you could also name a family member as a co-beneficiary.
As with all forms of small business insurance, you will want to talk to a licensed agent to determine the right types and levels of coverage for your business. Doing so will not only make sure your business is not on the hook if something out of your control happens, it would protect your family as their lives might be dramatically altered if your business had to close due to an accident.
