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Employers' Liability Insurance is mandatory for most businesses that employ staff, making it the only type of business insurance that is a legal requirement in the UK. On the other hand, some regulators or professional bodies require you to have certain types of insurance if you work in particular professions, such as if you are a solicitor or accountant.
In addition, it's also possible that you won't be able to sign contracts without having certain types of cover in place. You should check if your clients have any insurance requirements before you take on any work.
Even if it's not compulsory for your business to have insurance, you should still consider taking out cover regardless, in case of accidents and damages, theft or legal fees.
Some regulatory or professional bodies will set minimum cover levels for their members, so you should check their handbooks. If your business employs staff, you're normally legally required to have at least £5 million of Employers' Liability Insurance.
In addition to the above, you should also think about the scope of the work undertaken by your business and what sort of compensation costs you would face if something went wrong.
With regards to your business premises and contents, you should think about the costs that would be involved in rebuilding your premises from scratch and replacing your equipment and tools.
This depends on your business and the type of service you provide. The most popular types of business insurance are:
Public Liability Insurance
If your business comes into contact with members of the public (at your premises or elsewhere), you should consider Public Liability Insurance. It will protect you if a claim is made against you in the event of injury, damage made by clients, customers, suppliers and other third parties.
Employers' Liability Insurance
If your business has employees, you are most likely legally required to have an Employers' Liability Insurance policy. Some businesses are exempt, including some that employ close family members. If a member of staff suffers an injury, illness or damage as a result of their work, compensation claims will be covered.
Product Liability Insurance
If one of your customers suffers damage as a result of a faulty product, even if you didn't manufacture the product, Product Liability Insurance will protect you.
Professional Indemnity Insurance
Some professional bodies and regulators, including those for surveyors, accountants and architects, require their members to have Professional Indemnity Insurance. This type of insurance is important if your business provides advice or a professional service to other businesses, or if you deal with client data or intellectual property. If they lose money as a result of a mistake made by you and sue you, it will cover compensation claims or legal costs.
Personal Accident Insurance
Personal Accident Insurance covers lost income, medical costs and hospitalisation (up to the limit of the policy) if the insured suffers a serious injury or death caused by an accident. The maximum amount is £10,000 for an injury and £20,000 for death.
Business Buildings Insurance
Business Buildings Insurance should be a priority if you have business premises, such as a shop or office, and also if you work from home. A business building might already be covered if you rent the premises, but ensure you check with your landlord.
Business Contents Insurance
Business Contents Insurance can protect the contents of your business premises, your equipment and tools. If they are damaged, destroyed, stolen or lost, it will cover the cost of replacing or repairing these items.
Stock Insurance will cover the cost of replacing any stock that you have on your premises or in storage if it's damaged, stolen or destroyed.
Business Legal Protection Insurance
Also known as Business Legal Expenses Insurance, Business Legal Protection Insurance will protect you against the potential legal costs of legal action brought by or against your business.
Business Interruption Insurance
If your business is disrupted by material damage as a result of a flood, fire or other event, Business Interruption Insurance will provide you with the financial cover you need to get back on track.