Insuring your business

Whichever type of business you’re going to be in, it’s important to identify and mitigate as much risk as possible – to yourself, to your employees, and to your business.

Risk comes in many forms.  Although you’ll be working hard with success in mind, it’s important to minimise your financial burdens if things don’t go to plan.  An independent financial adviser (IFA) can explain what kinds of risk might affect your business and how to mitigate them – that is, how to put processes in place to reduce them, and where necessary what types of insurance can cover the remaining risks.

Employer’s liability insurance

In most cases your business is required by law to take out employers’ liability insurance – which should cover the cost of any damages or legal fees for employees who are injured or whose health is affected in the course of their employment with you.

Professional indemnity insurance

A professional indemnity policy protects against the risk of someone making a claim on you due to something that went wrong in the course of your work.  If you were a building contractor perhaps, you could run the risk of your work causing accidental damage to a neighbouring property.  The property owner would expect to make a claim against your professional indemnity insurance.

Public and product liability insurance

This kind of insurance covers your business in case someone (other than an employee) makes a claim that your business or one of its products has damaged them or their property in some way.

General business insurance

Most businesses will want to have a general insurance policy in place to cover their buildings and contents against things like fire and burglaries.  Many companies offering general business insurance will be able to tailor the policy to your precise requirements – for instance you may want to add cover for theft of money (particularly if you regularly hold or transport large cash sums), employee fraud, business continuity (to help replace income lost through an event defined in your insurance policy), and terrorism.  Some general business policies can also include employer’s liability insurance and product liability insurance.  It’s also possible to insure against some kinds of legal costs – for example employment tribunals or tenancy disputes.  Obviously, the more cover you have, the higher the insurance premiums, so it’s a good idea to discuss with an IFA precisely what risks your own business is likely to face, and make sure you are properly covered for the things that are more likely to happen.

Employee insurance

In addition to insuring for claims against your business, many employers see the benefits of insuring their employees against illness or injury with common policies being death in service (life insurance), critical illness, sickness and accident insurance.  You may want to also offer your employees the additional benefit of private medical insurance (which you can pay for but they will be taxed on as a taxable benefit).

Your employees are your most valuable asset – without them, it’s almost impossible to run a business.  Helping them get back to work if they’re injured or ill, is always easier when financial and practical support is available from a specialist.  With group life assurance, critical illness, income protection, all available you and your employees (and their families), can have the peace of mind and security that comes with knowing they are protected in certain situations. There could also be tax savings for your business, which your IFA can explain in more detail.

You may need to arrange key man insurance – that is, insurance for employees who are invaluable to the running of the business and who cannot easily be replaced.

You may want to talk to an IFA or financial adviser to find out about insurance policies that protect your business.  Many providers build up levels of expertise in certain sectors of industry, and some will understand the specific risks involved in your trade more than other.  It’s important not only to be comfortable the process of putting your policy into place, but also to have confidence in the provider’s ability to support you if you need to make a claim. Ask questions about the claims process, as well as your premium levels – and find out if there’s additional support or if there are other complementary benefits offered with your policy. You can use our search tool to find a financial adviser near you.

Questions you might like to ask a financial adviser…

  • What risks should my business insure against and what is the right level of cover?
  • Does the insurance company you recommend have a good reputation for handling claims?
  • How much will these employee benefits cost?
  • What will happen if I or my employees need to make a claim?
  • How much will your advice cost?