Between finding new clients, nurturing existing relationships and planning for growth, it can be easy to forget about protection for your business.
In our many years in the financial advisory space, we’ve encountered plenty of hair-raising situations whereby our clients or connections haven’t had suitable company insurance in place – and have unfortunately paid the price.
Though the exact insurance products you need will depend on the size, nature and activities of your organisation, there are some non-negotiable policies that must be in place to protect you from unforeseen risks (as well as some optional ones that can provide extra peace of mind for you and your teams).
Must-have insurance
Employer’s liability insurance
By law, any business with employees must have employer’s liability insurance, which covers compensation costs if an employee becomes ill or is injured because of their work. At least £5 million in coverage is required.
Public liability insurance
This is recommended for most businesses, and especially those that interact with the public, as it covers claims from third parties for injury or damage due to business operations. Shops, cafes, and service-based businesses, particularly those with regular foot traffic or visiting clients, often require this insurance.
Professional indemnity insurance
This insurance protects businesses that provide professional advice, such as consultants, accountants, architects, and legal advisers. It’s often the best fit for service providers rather than companies that sell products. It covers legal fees and compensation if a client claims financial loss due to negligence or receiving an inadequate service.
Product liability insurance
This type of insurance covers damages if a product sold by the business causes harm or injury. Any business involved in manufacturing, distributing, or selling physical products is encouraged to make sure they have this kind of policy in place.
Business interruption insurance
This covers lost income and operating costs if a business is disrupted by events like natural disasters, fires, or other events that cause business closure and/or prevent it from operating as it usually would. Policies can be underwritten to include rent expenses, payroll, and other overheads, so business owners can feel confident that they will be able to maintain some sort of financial stability during challenging times.
Property insurance
This protects the physical assets of the business – including its buildings, equipment, stock, and furnishings – against damage or loss from incidents like fires, floods, or theft. Some policies allow for business-owned items that move frequently, like laptops or machinery – be sure to double check precisely what your provider covers.
Cyber insurance
Increasingly essential for any business that holds customer or financial data, cyber insurance covers the costs that can often be incurred by data breaches, cyberattacks, and other online threats. Your policy will typically include notification costs, investigation, and data restoration.
Directors’ and officers’ (D&O) liability insurance
This protects company directors and officers from personal losses if they are sued due to their company role, covering legal fees and compensation. Corporations, especially those with significant client, stakeholder, or regulatory exposure, should always have D&O in place for their directors and key managers.
Commercial vehicle insurance
This covers any vehicles owned and used by the business for transportation, delivery, or service visits. It’s legally required if the business operates vehicles on public roads. Logistics companies, delivery services, and any business with a fleet of vehicles needs to consider commercial vehicle insurance.
Additional insurance options
Legal expenses insurance
Often considered an optional extra (but still extremely worthwhile), legal expenses insurance covers the legal costs for contract disputes, employment law claims, tax investigations, and other business-related legal issues. It’s especially important for businesses that are looking to manage potential legal fees or those that engage in complex transactions.
Key person insurance
This protects a business if a key employee, like the founder or CEO, becomes incapacitated or dies. It’s valuable for smaller and/or owner-managed businesses without a larger board to fall back on in the worst-case scenario, as it can help to buy some time while the next person in charge finds a way to save – or, in some cases, shut down – the company.
Personal accident insurance
This offers compensation for accidents resulting in injury or death to the business owner or employees. You can choose to offer this type of cover to your employees to help meet the costs involved in lost wages, medical treatment, and perhaps even retraining during their recovery.
Naturally, the combination of insurance cover you choose needs to be affordable for your firm. In our view, however, business insurance payments should be factored into your budget from day one, because you simply can’t afford to operate without adequate safety nets. They are not a luxury, they are a necessity.
If you haven’t already, be sure to examine your protection requirements to make sure your business and its people are covered from all angles. You should also review your insurance needs every year and be prepared to shop around for the most competitive prices. And remember, professional brokers can help you identify the right policy/ies and find a great deal – ask your network for their recommendations.