Thinking of starting your own business? A short guide to business insurance

As a service leaver starting your own business, insurance can often be over-looked in business risk management. You probably see insuring your home as common sense and the same should be true for your business.

Why insure?

Insurance provides a safety net when things go wrong and can protect you financially.

As a limited company – a more complex business model – you have some protection against personal financial loss, known as limited liability. Your assets are protected, but the business could still go bankrupt.

As a sole proprietor, the insurance you buy is to protect your business, you and your personal assets (including potentially your home) from a legal judgement that arises from an accident or inadvertent consumer mistake.

A well insured business could take the hit and carry on. Insurance is also a potential door opener, as customers will be reassured by your cover.

What to insure?

Liability insurance comes in several forms; public liability (often wrapped with product liability– critical if you are selling things) covers you and your products in case you cause damage or injury. Professional liability is insured as professional indemnity and is a special form of liability cover. This is for work where you advise, or design, or offer services to a customer where you might cause financial loss (without any physical damage).

Employees, remote workers, volunteers, sub-contactors

You must have employer’s liability (EL), which protects you against any claim for injury that occurs while at work. So, if you ‘direct’ a person’s work or activity then you must take out EL. There are some exceptions for close family members or sub-contractors.

Other insurance to consider

Income protection and personal accident insurance policies are designed to protect bread winners. So, you might want to look at policies that give you a lump sum or a supplementary income in case you can’t work.

Gadget insurance is a great option to look into. Many comprehensive home policies will cover home office equipment, but if your laptop goes with you on client visits or your phone is your office, then you should think about business gadget cover.

Shop around before you start a business and on every renewal; good insurance management is important as cover and premiums can vary considerably. Make sure you understand the exclusions or inclusions for stock/buildings/IT/office equipment – make sure your cover fits your business lifestyle: if not, find a different insurer.

Find out more about insurance options at the Service Family website, and through their blogs.

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