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Insurance is rarely top of the list when setting up a new business, there are many day-to-day issues that take priority. However, insurance can be vital in keeping your business running in the event of a major loss such as a fire or flood.
It makes good business sense to think carefully about insurance, particularly in today’s "claims culture" society where an injury or accident is likely to result in a claim for compensation. An unexpected loss can cause financial hardship and destroy years of hard work. In fact research has shown that many businesses which suffer a major disaster such as a fire or flood fail to recover from the event and go out of business.
What you should do:
All businesses need to check that their property (buildings, machinery, stock and finished product) is adequately insured against any misfortune. If your business owns and operates motor vehicles it is a legal requirement to have motor insurance. It is also compulsory to have Legal liability insurance to protect against claims made by employees or customers. And it is advisable to have Public and Products Liability insurance to protect against claims made by customers or members of the public.
A new business is likely to need some, if not all, of the following types of insurance protection:
Getting Advice – Find a Broker
For small businesses insurance is generally purchased as a package policy that will include all necessary property and liability covers. But the exact insurance needs for your business are best determined by seeking the advice of an insurance broker.
A broker will advise you on exactly what types of insurance you need, the level of cover necessary and offer guidance and advice on choosing the best insurance company to meet your needs.
Property insurance protects buildings and contents – such as stock and machinery - against loss or damage from risks such as:
All Risks insurance provides wider cover but it is not possible to insure against wear and tear or deterioration.
There are a number of statutory regulations that require the inspection and testing of plant and machinery on a regular basis. Equipment such as:
all has to be inspected on a regular basis. This is generally done by means of engineering insurance. Engineering insurance is provided by specialist insurers and provides cover against electrical and mechanical breakdown. The cover will also include an inspection service that will meet the statutory requirements outlined above.
Employers' Liability insurance is a compulsory class of insurance. You may receive a claim from an injured employee who alleges:
Employers' Liability Insurance protects you and your business against such legal liability claims and provides for the payment of compensation to employees who have been injured at work.
This type of insurance only provides compensation in the event that you have:
The cover will also pay for legal representation if an Enforcing Authority such as the Health and Safety Executive or an Environmental Health Officer from the Local Authority prosecutes you.
A firm can face claims from members of the public who enter your premises who may suffer injury through slipping or falling whilst on your premises. You would not be protected against such claims under your Employers' Liability policy. For these eventualities you should consider purchasing Public Liability insurance.
Public & Products Liability
Public Liability insurance is necessary to protect you against claims from persons who are not employees but might have been injured by your business. A typical example would be a claim from a customer who slipped and fell on your premises. Some businesses supply food and drink to members of the public. This carries the risk of illness such as food poisoning. If your business manufacturers and supplies products, your customers may be injured if the product is faulty, or if the instructions do not clearly state and describe the correct method of use. If you business is involved in the supply of goods then you should consider taking out Products Liability insurance.
Firms can face many types of claims in today‘s litigious society. There is a continuing growth in employment disputes involving unfair dismissal, harassment, discrimination and similar. Whilst your EL policy includes some legal expenses cover it does not cover these types of dispute and you may wish to consider taking out Legal Expenses cover.
Some firms provide Personal Accident cover for their employees – such cover will provide weekly benefits during absence from work due to sickness or accident and lump sum payments for a range of disabilities, both temporary and permanent.
To obtain a commercial insurance quote for any of the above please contact the British Insurance Brokers Association (BIBA) who will be able to advise you of local brokers please call their helpline on 0870 950 1790 or visit their website http://www.biba.org.uk/
This document contains general information and guidance and is not and should not be relied on as specific advice. The document may not cover every risk, exposure or hazard that may arise and Aviva recommend that you obtain specific advice relevant to the circumstances. AVIVA accepts no responsibility or liability towards any person who may rely upon this document.
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