Working out what small business insurance you need can seem pretty daunting. But for most businesses, it’s actually quite simple. Here we’ll explain the key policies that you have to have, those you should consider, and what you need to think about when getting a quote and purchasing cover.
In a word, yes. If your small business employs staff then at the very least you are legally required to have employers liability insurance (EL). Not only can you face a hefty fine from the Health & Safety Executive (HSE) if you don’t have it, but EL will protect you if one of your employees suffers an illness or injury while working for you, covering any legal expenses and compensation, if you’re found liable.
You will often find EL sold alongside public liability insurance (PL), which is also hugely important for most companies, although it’s not a compulsory insurance for a small business. It will cover you if you or one of your employees causes an injury or property damage to a member of the public - whether at your office, visiting a client or at an industry event. You may find that clients, or even suppliers, require that you have a certain level of PL, so check this before buying.
Chances are your business relies on some physical tools and equipment, which is where contents insurance comes in, protecting your belongings in the case of loss, damage, fire or theft. There are two types of policy here. Office contents will cover your fit-out, computers, office equipment, furniture and documents – anything that stays on your premises. Meanwhile, portable equipment insurance covers anything you take out with you, including laptops, mobiles, cameras and tablets.
If your business offers a professional service or advice, then professional indemnity insurance (PI) should be a serious consideration. PI will cover you if you make a mistake, or if a client suffers – or claims to suffer – a financial loss as a result of your work. As with PL, you could find that some of your customers insist you have PI – so it could even help you win business (or not lose it).
Another key consideration is directors and officers liability (D&O) – otherwise known as management liability insurance - which covers allegations that one of your founders or directors has personally done something wrong in the course of their duties. If that happens, the director in question can personally face legal action, fines, disqualification, or even a prison sentence. In addition, investors will often ask about D&O as part of their due diligence process – so it makes sense to have it when sourcing funding.
If you’re a startup founder or director, make sure your D&O or management liability policy covers you for insolvency and claims made by large shareholders (those who own more than 15% of the business). These risks are more likely to affect early stage businesses but are often not covered by traditional D&O policies. At Digital Risks we’ve designed a specialist management liability policy for startups, which will cover you for both.
Finally, with the explosion of customer data being held by all businesses, cyber liability insurance is another increasingly important option. A comprehensive policy (like ours!) will cover you for any legal and compensation claims, system downtime, data protection fines as well as helping you to respond effectively following a cyber-attack or data breach.
As a startup or small business, you don’t have the bandwidth to spend hours shopping around and talking to brokers to find the right insurance. That’s why with Digital Risks, we’ve designed a totally online process that makes buying insurance a doddle. Plus, with our flexible monthly subscription model, you can cancel or change your cover at any time.
The cost of small business insurance depends on your business activities and the risks you face, however it’s probably less than you think. Fill out our quote form here to find out!
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