Do I need business insurance?

Insurance. It’s definitely not the most exciting part of starting a business but you really do need it. There are a range of different types of insurance that you might need, even as a one-person home-based business and I’m going to cover the basics here:

Liability Insurance

If you injure someone or damage their property and you are found to be at fault, you may need to pay damages. Liability insurance protects your business against these costs. Liability insurance isn’t just for big companies who have to cover themselves against employees falling off ladders. If you’re a cleaner you could stain a client’s carpet, for example. Even an IT consultant could find a client tripping over their laptop case!

General liability insurance can cover a range of different things like employees, customers and damage to property and tools.

Professional Indemnity Insurance

Professional indemnity insurance covers you if you need to pay to correct a mistake or cover any legal costs because of negligence e.g. giving incorrect advice or making a mistake in your work. You’ll need this if you offer advice or handle clients’ data or intellectual property.

Home insurance

The home insurance you already have may cover your business at no extra cost, especially if your business is basically just a laptop. But it’s important that you give your insurance company a call to tell them that you’re running a business from home. Otherwise they may refuse to pay if you make a claim.

Check the terms and conditions of your mortgage too, as your mortgage provider may also need to know about your home-based business.

Motor insurance

If you’re using your car for your business, don’t forget to tell your motor insurance company. As for house insurance, not informing the insurer may make the policy invalid if you need to make a claim.

Adding business cover to your policy doesn’t usually cost much and it may even be free.

Other types of insurance

Depending on your business, you may need more specialist insurance too. For example, if you have expensive stock in transit, you’ll probably want to insure that. And business interruption insurance can cover you if your business has to stop trading due to e.g. broken equipment or fire damage. Or perhaps even unoccupied insurance.

For more information on the type of insurance that your business needs, it’s best to talk to an insurance broker.

 


The ins and outs of accident and sickness insurance

If you are self-employed, the chances are that from time to time you worry about just how you might cope if you were ill and unable to work.

Unlike a conventional employee, you are not going to benefit from your employer paying your salary for a specified period of time.

That’s why, it might be worth finding out a little more about accident and sickness insurance (companies such as Drewberry Accident and Sickness Insurance are specialists in this area).

Sickness and accident cover

This type of cover typically breaks down into two.

Some policies will pay you a regular monthly income in the event you are unable to work due to an accident or sickness.  Those payments may continue for a specified period of time of perhaps one or two years. (There are also rare policies that may run for up to 60 months).

It might be typically possible to also include unemployment cover in such a policy, though that would normally only pay out for 12-24 months (depending on the provider) and clearly might not be applicable in situations where you are self-employed.

A form of similar cover is traditionally called income protection insurance, which would continue to pay you a monthly income over an extended period of time perhaps up until your normal retirement date.

In both cases, the amount of monthly income would depend upon the policy you have selected but is normally available up to a maximum specified percentage of your previous income level.

Circumstances covered

A range of illnesses and accidental injury might be covered by these types of policies.

Broadly speaking, they may be claimable against in circumstances where you were able to obtain medical evidence that you were unable to work due to a specified medical condition.

It is worth noting that some insurance providers use the definition of own occupation whereas others might use that of suitable occupation.

This is a very important distinction because a policy written under the auspices of own occupation, might typically pay out in a situation where you were unable to continue with your normal work.  By contrast, a policy definition of suitable occupation might mean that the provider would expect you to take alternative occupation, other than that you would normally engage in, if you were physically able to do

As you might anticipate, all policies contain terms, conditions and exclusions.  You should read these carefully and seek the advice of an experienced broker, if necessary, to explain them to you.

Typically, this type of cover might exclude circumstances where you were purposefully responsible directly for your inability to continue work.  Examples might include things such as elective cosmetic surgery, pregnancy, engaging in criminal activities, the use of so-called recreational drugs or injury in highly dangerous sports etc.

Reassurance

If you are unfortunate enough to be unable to continue to work when you are self-employed, you may find that very quickly your financial situation deteriorates and perhaps even things such as your home are put at risk.

Having some form of on-going monthly income from this type of policy might just enable you to continue a relatively normal life until such time as you recover your health.

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Image courtesy of Michal Marcol / FreeDigitalPhotos.net