Checklist
Deciding on what insurance you need to protect your business against the unexpected can be a daunting task. This checklist gives you an overview of the main types of insurance that are available.
1. Employers’ liability insurance
All employers must take out employers’ liability insurance to protect against claims of compensation by employees who have suffered an injury or become ill as a result of their work. By law you must have cover of at least £5 million (though most policies provide £10 million cover). You must display your Certificate of Employers’ Liability Insurance at each place of business.
2. Third-party motor insurance
All motor vehicles your company uses on the road must be insured for third-party motor vehicles liability insurance. This covers you against personal injury to someone else or damage to property.
3. Public liability insurance
While not compulsory, public liability insurance is highly recommended as it covers you against accidents to members of the public or damage to property that occurs as a result of your business activities. It also covers any related legal costs. Most policies offer between £1 million and £5 million cover.
4. Product liability insurance
If you manufacture, repair, install or retail goods, then obtaining product liability insurance is important. It covers you against injury or damage caused by faulty goods. The premium will depend on who the product is sold to, how and where it is used and any warnings or labels that are provided. Average cover is for £2 million.
5. Credit insurance
Credit insurance covers you against the risk of debtors becoming insolvent, although you will be required to carry at least ten per cent of the risk yourself. Policies can be flexible.
6. Professional indemnity
Professional indemnity cover protects you against your legal liability for losses suffered by your customers as a result of your negligent advice. In certain professions, such as the law, accountancy and financial services, this insurance is required, but it is also common in other areas such as consultancy, publishing, engineering and design.
7. Buildings and contents insurance
Most businesses buy an all-risks policy that protects buildings and contents (including stock, equipment and fixtures) against a range of risks, such as fire, flood and theft. If you own your premises, you will need to insure them for the full costs of rebuilding, while if you rent check what insurance cover your landlord has.
8. Money
Money (including cash, cheques and stamps) is usually covered by a single all-risks policy. Different cover limits will apply to money on the premises, in safes and in transit. Level of cover also varies according to the nature of your business and opening hours.
9. Goods in transit insurance
‘Goods in transit’ cover protects the value of goods lost or damaged while in your vehicle or when sent by carrier. The sum insured is usually limited to a fixed amount for each vehicle or each consignment.
10. Business interruption insurance
Business interruption insurance offers cover for any consequential losses suffered following the original loss (such as after a fire). Packages include cover for loss of profits and fixed costs (such as rent) as well as the extra costs involved in getting your business up and running again.
11. Fidelity guarantee
A fidelity policy covers you against theft and other forms of dishonesty by employees. Also known as staff honesty policies.
12. Key man insurance
If your business relies on one or two key employees – such as a specialist engineer or key salesperson – then you can take out key man insurance, which pays out in the event of the employee’s death. Cover is usually equal to the estimated loss of profit that would result from that person’s death.
13. Critical illness cover
Critical illness insurance provides a cash lump sum for specific employees in the event of a serious illness, such as a heart attack or a stroke.
14. Private health insurance
You can offer private health insurance as a staff benefit – helping to attract and retain employees. If your staff receive prompt medical attention, it can also help in enabling employees to return to work more quickly.
15. Income protection insurance
Income protection insurance is used to cover employees in the event of long-term sickness, paying their salaries during the period of incapacity. This relieves your business of the burden of paying for a sick employee, or if you are self-employed provides you with essential income while you are incapacitated.
16. Directors’ and officers’ insurance
Directors and officers of limited companies can be held personally responsible for a range of issues such as health and safety, data protection, fraud and negligence. Directors’ and officers’ insurance can cover any compensation payments and legal fees, although if the act is deliberate it may not be covered by the policy.
17. Travel insurance
Travel insurance should be taken out whenever you or one of your employees travels overseas. If you travel regularly, look for an annual package deal.
18. Legal expenses insurance
Legal expenses insurance covers legal costs such as solicitors’ fees and court costs, as well as offering legal guidance via a telephone helpline.
19. Engineering insurance
Engineering policies cover most machinery against breakdown, and will often include inspection and certification of your equipment as necessary. Equipment can be insured for the item’s value less a deduction for appropriate wear-and-tear, or on a ‘replacement as new’ basis.
20. Data processing insurance
Computer policies can cover you for breakdowns and for loss of information.
Further information
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