BUSINESS INSURANCE ADVICE

There are many types and variations of Small Business Insurance that you may want to consider to protect your organisation from financial risks. Bowlin Insurance as brokers have prepared a simple reference of these insurances so that you may identify the main types of insurance available to small businesses. The first three on the list where relevant, are compulsory insurances (required by UK law), with the remaining types of cover being highly recommended for consideration to reasonably protect your business.
N.B. This information is intended for easy reference only.
Before taking action you are advised to get professional advice from a qualified insurance advisor such as Bowlin Insurance.

Employers Liability Insurance [ COMPULSORY INSURANCE ]

The Employers’ Liability (Compulsory Insurance) Act has been around for almost 40 years and dictates that as soon as a business employs one or more person (other than the owner) that the employer is responsible for their health and safety whilst at work. If an employee is injured as a result of an accident at work, or becomes ill as a result of performing the work, then the employee may seek compensation. To make sure that the employer can pay the compensation the law says the business must take out a minimum £5 million of Employers Liability Insurance cover.

The Employers Liability Insurance certificate must be displayed where employees can see it. nb. Family businesses are exempt if the employee is closely related. eg. Your wife or brother as long as the business is not incorporated as a limited company. If you do not get this right then the Health & Safety Executive have it within their power to fine a business up to £2,500 a day! Click here to download an information PDF file from HSE for more info.

Business Motor Insurance [ COMPULSORY INSURANCE ]
If you own a business vehicle it must be insured with a minimum of third party insurance. This will cover liabilities to the business for damage to the property of others as well as injuries to others, not including the driver of the business vehicle. Most small businesses will also add cover against fire or theft and consider comprehensive insurance to not only cover the cost of damage to the vehicle but also cover injuries to the employee/driver. nb. If your business vehicles are driven by employees then it may be reasonable to expect more claims than you might first anticipate. The reason being, that a company employee is unlikely to look after the vehicle as well as if it were his or her own.

Specific Professions [ COMPULSORY INSURANCE ]
There are certain professions that are required to have certain insurance in place in order to carry out their work. A good example of this is Solicitors who are required to have Professional Indemnity in order to practice. There are also similar professional indemnity rules for Architects, Independent Financial Advisors, Engineers, Brokers, and Accountants.

Business Premises Insurance
If you operate your business from a commercial premises or an office then you will have contents, computers and maybe stock that you will have to replace in the event of a loss. If your business owns the building then you will need to consider buildings insurance. This is very similar to consumer household insurance in that this will protect your business from buildings and contents risk in the event of a fire, flood, burglary or catastrophe.

Public Liability Insurance
Public Liability Insurance covers your business if someone is accidently injured by you or your business operation - for example a customer trips and injures themselves whilst visiting your offices. It will also cover you if you damage third party property while on business – for example you trip and break a customer's equipment when visiting their office. Public Liability Insurance will also usually include cover for legal fees and expenses which result in claims by third parties. Taking out a Public Liability Policy is not a legal requirement but it is certainly good business practice and sometimes necessary to win contracts. eg. Most UK Local authorities will demand a minimum of £2m public liability insurance for contractors if work is to be undertaken on their behalf or upon their premises.

Product Liability Insurance
If you are involved in producing, repairing or selling products, then you should consider taking out Product Liability Insurance. This will cover your business in the event that you are found liable for injury or damage resulting from use of your product. This area of insurance can be complex and any claims or resulting court cases can be very expensive, thus the cover may seem quite expensive at first glance. As with any insurance, you have to consider the risks involved and the prospect of being faced with significant legal bills should the worst happen. Product Liability Insurance is not a legal requirement although some customers (especially in government contracts) may insist that you have it.

Professional Indemnity Insurance / Errors and Omissions Insurance
If your business gives advice to customers, in case the advice leads to financial losses you may wish to consider Professional Indemnity Insurance, also known as Errors and Omissions Insurance. This will protect your business from legal claims relating to negligent acts, infringement of copyrights or trademarks, loss of documents as well as liability that leads to theft from your clients. This can be compulsory as mentioned above for Architects, Independent Financial Advisors etc. It is common to find that Engineers, IT Designers, Contractors and Consultants consider Professional Indemnity Insurance to be essential.

Pollution Risk Insurance
If you operate a manufacturing business, Pollution Risk Insurance will provide cover for losses and costs arising from any pollution caused by sudden or unforeseen circumstances. Some such risks may be covered by your Public Liability Insurance, however depending on your business you may feel that specialist pollution cover is necessary. For example, Public Liability Insurance may cover you for a one off accident but not for a gradual cause such as leakages of chemicals over a period of time. You will need to consult an insurance specialist in order to be satisfied that you are fully covered for legal costs, clean up expenses and damages to people and property as a result of pollution.

Business Continuity Insurance
Every business is susceptible to commercial risk due to circumstances beyond their control. Common examples of which can be: a business premises catching on fire, loss of power, the effects of severe weather including floods, a loss of communications, a failure of a key piece of equipment and any denial of access to your premises. The effects of not being able get to your office or not being able to provide your services for possibly weeks could be disastrous - your customers will only wait for so long for you to get back to normal. Business Continuity Insurance can cover you for such longer term trading risks that are not covered by your Business Contents Insurance.

Key Person Insurance
Small Businesses from sole traders upwards are particularly at risk if a key member of the organisation dies or suffers a serious illness. As a result of such an occurrence, Key Person Insurance can provide cover for a loss of profits, a loss of complete services that can no longer be offered as well as the costs towards recruitment or training of a replacement. Depending on the length of cover, there can be a number of ways of tackling this. eg. For a short term cover on perhaps a specific project a ‘term assurance’ policy might suit best, however for long periods a ‘life assurance’ type policy is more likely to be suitable. For full cover you would probably also consider taking out ‘Critical Illness Insurance’ as well. It is best to speak to an insurance expert when considering Key Person Insurance to identify the most suitable cover, as well as fully considering the tax implications.

Directors and Officers Insurance
It is reasonable to assume that most Company Directors and Company Officers make their decisions in good faith, however an ill judged decision could result in such a person facing unlimited personal liability. Directors and Officers Insurance can be arranged to cover legal costs, awarded damages and consequential losses for such circumstances.

Employee Dishonesty Insurance / Fidelity Guarantee Insurance
Should your business wish to protect its self from the loss of money and property resulting from an act of fraud or dishonesty by one or even a group of employees then you should consider Fidelity Guarantee Insurance which is also sometimes known as Employee Dishonesty Insurance. nb. This may not always prove to be cost effective for businesses with only a few employees.

Money Insurance
Should your business handle cash, cheques, postal orders, bankers drafts or valuable documents then Money Insurance can offer you some protection from accidental loss or theft. These items can be covered if they are on the company premises, in transit, in a night safe or even at an employee's residence.

Goods In Transit Insurance / Marine Insurance
If your business moves stock, property or goods around you may wish to consider Goods In Transit Insurance or Marine Insurance in case of damage, loss or theft. This cover can include transit by road, sea, air, by postal service and also can cover when the items are being stored as part of their journey.

Plate Glass Insurance / Sign Insurance
If your business premises contains large glass areas and signage this may not be covered under your normal Business Premises Insurance. You should check with your insurance broker or insurance advisor as some such items often relating to shops and hotels, will require a separate Plate Glass Insurance policy to cover repairs or replacement.

Employee Travel Insurance / Business Travel Insurance
Should you have employees who regularly travel abroad, or even want to include travel insurance as part of an employee’s benefits package, you may consider an Employee Travel Insurance package. This can cover multiple persons for business and non business related travel. Specific policies can be provided to cater for added business travel insurance needs such as cover for replacement of a laptop or even a key employee incapacitated whilst away.

Legal Expenses Insurance
Legal expenses insurance is commonly offered as part of another policy rather than as a stand-alone product. eg. Some cover may be provided within some commercial motor policies or domestic household policies. Most businesses however, will need to consider their risks in terms of possible business legal expenses. These may arise from contract disputes, property disputes, employee disputes (and ex-employee disputes), data protection issues, disputes with the taxman as well as legal costs relating to being prosecuted. Such business legal expenses are very difficult to predict and can be seen to present significant risks. Business Legal Expenses Insurance can also provide cover (business compensation) for employees who have to attend legal proceedings such as Jury Service or Witness Duties.

Trade Credit Insurance
If your business is at risk from failing to collect money from debtors, or suffers from delayed collections, then Trade Credit Insurance is worth looking at. You can cover all customers or pick out some key debtors, maybe even just one (usually if you have one large customer). Trade Credit Insurance protects you from your customers becoming insolvent or making protracted payment. Either way this will provide for better cash flow, reassurance to investors, reduced legal costs and debt collection costs. If you know the percentage figure from your business of bad debt then you may wish to compare this to quote on a Trade Credit Insurance premium. Typically they are charged from between 0.3 to 0.7% of a business’s annual turnover.

N.B. This information is intended for easy reference only.

Before taking action you are advised to get professional advice from a qualified insurer such as Bowlin Insurance.

Of course the staff at Bowlin Insurance are always be happy to talk you through
the various options that you may consider relating to your
Small Business Insurance

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