Insurance

Matthew was worried about the potential liability of operating his architectural business in Bolton, and so spoke with Endsleligh Insurance Services on Bradshawgate, who gave him a tailored quote for his practice. He was chuffed to bits and took them up on their offer immediately. 

For the other budding start-up candidates finding the right business insurance can be a difficult and complicated process. There is a certain amount of jargon associated with the area which can put off many small firms. Businesses want to buy a policy which will protect them when times are bad, or, if disaster happens. In this section, we take you through some of the insurance’s, but stress that it is only a guide and the best solution is to see how the business develops but get some professional advice… sooner rather than later.
 

Our preferred supplier is Endsleigh Insurance and can be found at http://www.endsleigh-business.co.uk/

However, thinking about worst-case scenarios is not something which positive, forward thinking entrepreneurs really want to do - you are probably thinking about how your business is going to grow and improve not how it could all go wrong.

Disasters such as floods, fires and break-ins might all seem to be both unfortunate and unlikely and something that won’t happen to you.

This section of www.BoltonBusinessSartup.com aims to show businesses like yours what type of policies are available and they can benefit you. Also, it will provide you with ideas and suggestions for finding out what you need, how to keep your premiums down and what the real likelihood are of disasters affecting you.

As an entrepreneur you might see your insurance as one of those unavoidable costs - you don’t much like it but you’ll go along with it. However, for many firms it ends up being their life support. You never know if disaster is lurking around the corner, but it is too late to get cover after the incident has happened.

Nevertheless, insurance is not an area where ‘one size fits all’ - don’t buy a policy unless you really need to. But also don’t fall into the trap of scrimping on costs, as you might find out that you are not covered when the worst happens.

As we shall discover throughout this section, it is important to understand your own risks, know what the insurance market has to offer and to thoroughly read and understand any policy before committing to it. Insurance can be a complex topic for some, but it isn’t rocket science and you can get it right. Good luck

Why you need insurance

Entrepreneurs often see business insurance as one of those costs which you could almost get away with not buying.

Aside from legal requirements and demands from customers to have a certain level of liability, you might well think that there is little point to your insurance policy.

However, there are many examples of businesses going to the wall following a disaster for which they weren't covered. Similarly there are many instances when a company has bounced back after it looked like it had passed the point of no return – all because they were insured to the very hilt.

You might consider the risks that your business faces to be small or even affordable, but if this is the case then there is a very good chance that you are underestimating them.

The chances of your business being hit by a flood or destroyed by a fire might seem low, but disruption to your work can come from many quarters.

A criminal act in your street could lead the police to cordon off the area for a period of time. Despite not being able to trade, you will still have to pay your staff, rent and other costs. You could lose a very significant amount of business or incur heavy costs while attempting to maintain it.

However, all of this could be prevented with a business continuity insurance deal.

As mentioned, some of your clients might ask about your insurance details before they are prepared to do business with you. Public liability is important for many clients, particularly in the public sector.

In a B2B setting, an insurance policy acts almost like a credential. By having a high level of cover you are demonstrating that you are a respectable business which takes health and safety very seriously, and that you fully understand your own responsibilities.

Therefore it isn’t just dead money, but a way of accessing opportunities which you wouldn’t otherwise be able to gain.

Insurance you must have

There are some insurance you must have. Here's the full list:

• Employers’ liability insurance.
  Nearly all businesses need some level of liability insurance, and employer’s liability insurance is the most common one. If you are about to take on staff then you should ensure you have this first. Also, if you are thinking of setting up a limited company then it is a legal requirement as well, as technically the company is the employer. If any member of your staff is taken ill, suffers injury or death and this is deemed to be as a result of their work, then you are potentially liable.
  
  Therefore the law states that you must have cover in order to cope with this eventuality. By law employers must have at least £5m of liability, although many policies offer £10m. There are just under 400 deaths and nearly 30,000 major injuries at work each year in the UK, therefore you are well advised not to make any cuts here.
• Motor insurance.
  As any driver knows, motor insurance is a legal requirement, but many come unstuck when using vehicles for work related activities.
  
  You might think that your current insurance covers you, but unless your policy includes work use then you are mistaken. The good news is, however, that this is not normally expensive and some insurers offer it for free.
  
  If you are employing someone who is using their own vehicle for work purposes other than travelling to work, then you have a responsibility to ensure they are fully covered. A work purpose could be as innocent as dropping you off at a meeting - it doesn’t matter - they still require business insurance.
  
  It is also highly advisable to check with the DVLA that your staff are legally able to drive and take copies of their insurance and MOT documents, as well as their driving licences.  
  
   
• Public liability.
• Public liability insurance, though not compulsory, is something only the most cavalier business would cut back on. It covers you for damage against property or persons that you might encounter during your work.
  
  Many clients won’t deal with you or can’t legally deal with you unless you have it, so you might consider it to be obligatory.

Employers' liability insurance

Recent surveys suggest that many small and medium-sized businesses consider employers' liability insurance (ELI) as an option, which some choose not to take. However, it is an absolute must if you employ any staff, even on a part-time basis. You are required by law to have it and face a fine if you don't.

ELI protects you from claims made against you if an employee falls ill or has an accident while working which they believe is your fault. ELI will cover compensation pay outs if this proves to be the case. The minimum cover is for £5m, but you’ll find most policies start at £10m, as you will also have to cover legal costs.

You must display your certificate where staff can read it, and it’s a good idea to check your rights and obligations with the Health and Safety Executive.

It’s important to remember that having ELI does not make you untouchable. As an employer you are responsible for the health and well being of your staff and you must ensure you honour all your health and safety obligations, such as carrying out a risk assessment, and have the paperwork to back this up.

If not, you may find that insurers won't pay out, your premiums are affected, or, if they are still required to pay for your compensation they may be entitled to sue you to claim it back

Product and public liability insurance

Unlike employers' liability, which is compulsory, public liability insurance is optional for most businesses. Rather than covering you for compensation claims made against your business by your staff, this covers you for those made by other businesses or members of the public for injuries or damage to their property.

It also covers you for legal costs incurred defending claims made against your business. Your premiums will depend on your type of business, revenues and employees.

Make sure you keep your policy up to date to reflect changes in your business and cover new risks, such as working off-site.

If you're a manufacturer or supplier of goods, there's a risk that one of your products may damage a member of the public or their property. Product liability insurance is also voluntary for most businesses but will cover you in this instance and is really a must for product-based businesses.

Even a small fault can sometimes lead to major claims where the legal costs alone can bring a business to its knees. Again, there are caveats.

This type of insurance is for unforeseen circumstances and your products will have to meet certain quality levels in the first place to make a claim. It won't cover you for making substandard products. Any quality control systems you have in place will help lower your premiums so make sure your insurer knows all about them.

Your policy should protect you from safety claims, manufacturing quality, spoilage and indemnity costs such as medical bills. Liability insurance could save you a small fortune if you find yourself facing a series of claims.

Professional indemnity insurance

If yours is a service business, such as a consultancy, solicitors or accountancy firm, you will need to be covered incase you make a mistake and your clients pay the price.

If your business charges for services or advice, you should give this cover some serious thought or face paying hefty damages in the event of a lawsuit.

Compensation worth hundreds of thousands of pounds can be awarded for something like your client's e-commerce site going down or getting their contact details wrong on marketing materials.

Policies can cover you for areas such as libel and slander, malicious falsehood, misrepresentation, errors, omissions, negligence and unintentional breach of confidence.

However, the thing about indemnity insurance is you need to be covered at the time a claim is made against you, not when the mistake is made. This is worth bearing in mind if you are planning on selling your business or retiring.

You may also want to look at taking out directors' insurance. Under the Companies Act 2006, which represented the biggest shake-up in company law for more than two years, directors have been given a much greater amount of responsibilities for a wide range of stakeholders, making this cover all the more useful.

It will cover you against personal liability for most civil actions brought against you, including health and safety issues and data protection.

Tradesman insurance

Being a tradesman gives rise to a number of risks that you need to make sure you are protected against. One of the most important things to look for when choosing a policy is its public liability cover.

Working in other people's homes makes this a key concern and you may well face litigation if your work causes any damage to their property or any injuries. Likewise, you may face legal action for any injuries your staff sustain at work or any illness they feel has arisen from the job.

Due to the nature of tradesmen's work, which often involves manual labour or working with dangerous tools, there is a much greater risk of accidents than there is in an office environment, which makes your employers' liability insurance invaluable, and many policies will also cover this.

There are other things to consider that may not be covered by the standard tradesman insurance policy but can usually be added as 'bolt-ons'.

Given the nature of the work, personal accident cover can be extremely useful to cover medical expenses or loss of earnings in the result of a work-related injury.

It's also worth ensuring you have some form of cover for your tools. Many builders, plumbers, electricians and other tradesmen are self-employed and therefore provide their own equipment, which can be extremely expensive to replace if lost or damaged and can seriously jeopardise your income