• Startups
  • January 29, 2022

What does business insurance cover?

Insurance may not be the most exciting of topics but figuring out the type of insurance you need, and the extent of cover required is an essential and ongoing process for any small business owner. This article provides some initial guidance on what insurance covers and the types of insurance available to SMEs.

The first thing to consider when deciding on the type of business insurance you need is the nature of your organisation. It is useful to ask yourself the following questions:

  • Do you have employees and if so, how many and where do they work?
  • How many buildings does your business operate from and do you own or lease the premises?
  • What type of equipment/tools/computers do you have and where are they stored?
  • Do your business activities put you at risk of negligence claims from members of the public?
  • How many and what sort of vehicles are used in your business?
  • Do you use agents or distributors?
  • Do you have stock and property located abroad?
  • Do you process personal data?
  • Would a disaster such as a flood, explosion, or riot result in your business having to close for a period?

What are the different types of business insurance and what do they cover?

The most common types of business insurances are:

  • Professional indemnity insurance – protects your SME from claims related to mistakes, for example, a defective product.
  • Public liability insurance – provides cover if a member of the public brings a claim for damages caused by a negligent act or omission by your business.
  • Employer liability insurance – this is a legal requirement for most businesses that employ staff. It provides protection if one of your employees becomes ill or injured as a result of work.
  • Directors and Officers’ insurance – covers you for certain claims made against you in your role as a company director.
  • Contents insurance – protects against loss and/or damage to your organisation’s tools and equipment (including office equipment such as computers).
  • Commercial building insurance – if you own the building you operate from this type of insurance will cover loss or damage to that property.
  • Sole trader and self-employed insurance – can be tailored to protect you from claims brought against you in your capacity as a sole trader.
  • Business interruption insurance - replaces business income lost due to a disaster. 

The cost of each type of business insurance will vary depending on the extent of cover you need and the market sector you operate in.

Wrapping up

The above types of insurance are only a small selection of the variety of cover that is available to small businesses. To ensure your insurance cover is adequate and can protect you from legal expenses, talk to an experienced insurance advisor about your requirements.

In closing

Nothing in this article constitutes legal advice on which you should rely. The article is provided for general information purposes only. Professional legal advice should always be sought before taking any action relating to or relying on the content of this article. Our Platform Terms of Use apply to this article.

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