Insurance FAQ's

Why do companies need insurance?

Is business insurance compulsory?

What types of business insurance are there?

Are there any business insurance packages?

What are the consequences of not being insured?

How much does insurance cost?

How do I buy business insurance?

Why do companies need insurance?

The majority of businesses will require some sort of business insurance policy. The cover you take out depends completely on the nature of the business and the everyday activities involved in the industry.
The purpose of insurance is to cover your company in situations you cannot afford, for example if an employee claims compensation, or your company accidentally causes severe damage to a customer's property. Ensuring you have the suitable cover means the insurer will pay out up to the amount specified in the agreement.

Insurance is particularly important for small companies who could risk going bankrupt if someone were to make a large claim against the company. Always make sure you have the appropriate cover for all your business' activities.

Is business insurance compulsory?

The following types of insurance are mandatory for many businesses; click the links to find out if any apply to your company.

What types of business insurance are there?

Are there any business insurance packages?

There are many insurance packages available to small businesses so you will need to ask your broker which cover would be most appropriate for your business' needs. Some insurance companies will offer packages that others may not so be sure to shop around and get the most suitable policy possible.

Common Insurance Packages

Office Package

If your workplace is at an office then an office package may be something you wish to consider. An office package usually includes Employers' Liability, Public Liability, Product Liability and some Contents Cover. Optional extras are often available for a slightly higher premium depending on the nature of your business.

The cover included in an office policy is likely to vary between insurance companies so ensure you find out exactly what you are buying and that the cover you require is included.

When taking out your policy, be sure to explain to the broker exactly what your company activities involve, if some of your employees work out of the office they may not be covered under some office policies. Only your broker will be able to advise what is covered under certain policies because every insurance provider is different.

Homeworker Policy

Many Insurance companies offer a 'homeworker policy' which usually provides you with Employers' Liability, Public Liability, Product Liability and some Contents Cover. They also offer optional extras such as legal expenses if your company is slightly higher risk in certain areas but you may have to pay more for these.

Like with any other policy, a homeworker package allows you to decide how much cover you require by analysing the possible risks of the business' activity. If you opt for minimum cover your policy is likely to be cheaper than a company that requires a higher level of cover. An insurance broker will be able to help you pick the best level of cover for you and your business.

A homeworker policy is only valid while the registered home is the company's place of work. If your company grows and you decide to move into rented premises or even acquire your own property then you will need to inform your insurance company.

What are the consequences of not being insured?

If you’re just starting out in business, insurance should not be something you take lightly. It may seem like an unnecessary burden when everything’s going well but if circumstances change and a claim is made against you or your business, you will be extremely grateful that you took the time to insure against it.

If you decide not to take out an insurance policy and someone claims against your company you may have to pay out extremely high sums of money to settle the claim. By taking out a policy you are handing over the risk of paying out money you cannot afford to much smaller monthly or yearly payments that you can afford.

If a certain type of insurance cover is compulsory for your business, for example employers' liability insurance (if you have one or more employees), you may be fined a large sum of money for every day the appropriate cover is not in place or even be shut down by the Health and Safety Executive.

How much does insurance cost?

The cost of insurance largely depends on the nature of your business and the type of cover you require. Obviously, the higher the level of cover, the more you will have to pay for your policy. The insurer will anticipate the likely situations your business could encounter and the risks involved to decide how much they require you to pay each year.

How do I buy business insurance?

Insurance can seem overwhelming when you first start looking into which cover you need; there are so many different policies that getting the right insurance can take a lot of time and effort. Generally insurance can be bought in the following ways:

Buying Direct or using the Internet to search

Buying direct from companies or shopping around online may seem at first to be the simpler option, but the majority of the time it’s far more practical to use a broker or intermediary. The reason for this is that buying direct or online limits your options – the companies you deal with will only show you their own products, which may not be suitable for what you need.

The time it would take to ensure you received the best policy for your money would probably be better spent elsewhere, leaving the expert brokers to find you the best deal. However, it does depend on individual businesses needs and the type of policy required. Some businesses may prefer to sort out their own policy, especially if they only need a standard package.

Using a broker

The main advantage of using a broker is that they can ensure your cover is properly tailored to your individual business' needs. As they are not trying to sell you their own products they can provide expert advice. Insurance can be extremely confusing and you want to make certain you're covered for every possible scenario - it's no use having a policy that you think covers you only to find out later that the insurance company won't pay out.

You can choose a broker based on where you live, or what it is you have to insure. Whichever broker you choose, ensure the broker is FSA Regulated.

However you decide to buy your insurance, remember that some types of insurance are required by law and you could be fined if you do not have them.