What Types of Business Insurance do You Need?

When you run a business – even if you operate from home or as a sole trader – you’re legally obliged to be covered by certain types of business insurance. Although this adds to your overall business expenses, it is absolutely necessary.

Small businesses – especially start-ups – may have a cashflow problem in some periods. In this case, the best direct lender can help get you through. With a payday direct loan, you can ensure that you’re covered and meet the legal requirements. 

Which policies you take out primarily depends on the kind of company you have. Let’s consider the most common.

Is employers’ liability cover compulsory?

As soon as you stop being a sole trader and employ someone else (even if they only work part-time or are temps), you become responsible for their safety and welfare. For this reason, you must take out employers’ liability insurance. If they fall ill and/or injured as a direct result of working for you, then this policy would pay the costs of any legal fees and compensation. If you don’t have this insurance, you can face stiff fines (which can be back-dated).

The standard employers’ liability cover is usually for £5 million although some insurance providers now recommend that £10 million is better.

Who needs public liability cover?

Your job might involve your clientele visiting your business premises or you going to them. In either situation, you should take out public liability cover. Although it isn’t compulsory, you may find that clients won’t hire you on a freelance and/or contractual basis unless you can prove you’re covered.

This policy will pay for your legal expenses and compensation if someone were injured/hurt in an accident and you were judged to be responsible. Public liability insurance usually covers you for sums up to £1-£10 million. 

Is professional indemnity insurance necessary?

Professional indemnity insurance can protect your business if a client/customer has a complaint about the quality of your work or claims negligence in the way you carried out your work for them. For certain regulated professions (such as solicitors), it is a legal necessity to have this insurance to cover the costs of legal fees and compensation. However, more and more companies are seeing the need to have this policy. Depending on the size/turnover of your firm, professional indemnity cover should be £2-£5 million. 

Do home workers need business insurance?

You should never assume that your home contents policy will cover any equipment and/or tools you need for your business. Therefore, you should always inform your insurance provider and if necessary, take out additional and/or specialised cover for any equipment which is particularly valuable.

The cost of business insurance premiums

Like any type of insurance cover, the cost of your business insurance premiums depends on a variety of factors. Insurance providers will consider your personal and professional circumstances and your past history (for records of previous pay-outs, for example). Even a bad credit score can lead to higher premiums.