What insurance do I need when starting a business?

Will I need fire insurance for my new business? (photo by Ed CC-BY)

Will I need fire insurance for my new business? (photo by Ed CC-BY)

If you are starting up a business in the UK, one of most important things you must consider is insurance. There are many types of insurance. Some are required by law, while others you should consider to ensure that you and your business are protected. As to what types of insurance, it depends on the nature of your business, if you have employees, how you deal with your customers or members of the public, and so on.

The following insurance is required by law (subject to certain exceptions) if you have employees: Employers’ Liability Compulsory Insurance. You are responsible for your employees’ health and safety at work. This insurance covers claims for compensation by employees in the event of injuries received while working for your company. This Health and Safety Executive leaflet A Guide for Employers gives further information.

Choosing the right type of insurance can be daunting. There is theft of, and damage to your stock, assets and cash by staff and by fire, flood or storm to consider. What about your key personnel? Could your business withstand their loss due to accident or injury? What would happen if a customer injured themselves on your premises? Could you afford to pay for the court case or claim for compensation without insurance? Do you store hazardous materials? Are your products safe? Could you cope with any claim for negligence over their design or manufacture? What happens if your debtors cannot pay you? Finally, why pay for insurance which you do not need?

First stop should be the government’s Business Link website. They provide a step by step questionnaire to guide you through this process. The website asks various questions about your business, and on the basis of your answers, provides a guide to the different types of insurance you will require.

This guide will then provide you with a useful discussion document to refer to when you come to speak about your insurance requirements with an insurance broker or independent financial adviser (IFA), depending on the type of insurance you require. Again the Business Link website provides good advice on selecting you insurance adviser.

It may seem as another financial burden on your new business, but insurance is a vital need in today’s business world.

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