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What insurance do startups need?

As a new business, you might see insurance as one of those costs you don’t want to organise straight away or may not have even considered yet. However, the right insurance is crucial for protecting your business, and for many, it ends up being their life support. If you’re not adequately covered, you could risk damaging your financial health in the event of an uninsured loss.

Some types of insurance are required by law, whereas others are optional but can protect your investment in your business. Here is a summary of some of the main types of business insurance that you should consider.

Employers’ Liability Insurance

This insurance is legally compulsory for all businesses that have any employees, more than one director of the business or engage labour-only subcontractors. By law, cover is required for at least £5 million.  In practice, however, most policies provide a limit of £10 million. You could be fined a maximum of £2,500 for every day that you don’t have insurance. As an employer, you are responsible for the health and safety of your employees while they are at work and this insurance is designed to cover any compensation claims made by your employees for injury or damage that is caused by their work.

Professional indemnity insurance

If you offer a professional service, such as IT, marketing or management consultancy, or have set up a graphic or interior design business, you may want to think about professional indemnity cover.

Professional indemnity (PI) insurance protects your business against claims for loss or damage by a client or a third party if you have made mistakes or are found to have been negligent in some or all of the services that you provide for them. PI insurance will also cover legal costs.

Public and product liability insurance

If members of the public visit your premises, or if you visit and work on their premises, consider public liability insurance. It covers damages and legal costs when a member of the public dies, is injured or suffers damage to their property.

Additionally, product liability insurance can cover the cost of damage or injury caused by products you make, sell or repair.

Motor insurance

Do you own, lease or hire any vehicles? If so, you are legally obliged to set up motor insurance to cover third party damages, as a bare minimum.  You can opt to extend this to cover damage to your own vehicle too.

Building and contents insurance

If you have business premises, such as a shop or office, business buildings insurance should be a priority. If you rent the premises, it is important to check with your landlord to see what’s already covered. If you work from home business activities may not be covered under a standard home insurance policy so check your policy documents as you may need extra cover.

It is also possible to protect the contents of your business premises, for example, business IT equipment and tools. If these are damaged, destroyed, lost or stolen, this cover will pay the cost of replacements or repairs.

Business Interruption Insurance

Business interruption insurance (BI) is vital for virtually all businesses if they are to survive a major disaster, such as a fire. BI protects the business from the break or reduced trading in their commercial activities and consequently being unable to maintain their turnover or income.

BI cover will maintain payments to employees, increased costs to the business such as renting alternative accommodation and any fixed costs.

Cyber insurance

If you transact business online or hold any personal client data, we would strongly recommend a cyber insurance policy that can help you following a data breach or internet hack.

Travel insurance

If you travel overseas for work, or if any of your employees do, then we would suggest you consider travel insurance to cover unexpected medical bills and/or any other associated cost.

For more information, or to request an insurance review and no obligation quotation, please contact our Director of Insurance, Richard Gorst.

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Strength in Numbers The Start Up Edition