Any good business owner knows that protection is one of the most fundamental elements in business, no matter what industry you’re in. Insuring your business not only gives you peace of mind but also safeguards certain aspects where your company is at threat or if something bad were to happen. Business insurance is for all businesses no matter what size, from huge multi-national firms to the smaller companies which make up the backbone of the economy.
Knowing what exact types of insurance for your business is needed, what is recommended and what really isn’t essential can be hard to figure out especially with so many different insurance policies out there. Often many businesses will talk to insurance firms and purchase all manner of policies which aren’t necessarily appropriate to their sector or structure. On the other hand, many businesses choose to skip certain business insurances, seeing it as a waste of money that’s not needed. However, some forms of business insurance are required by law to legally operate in the UK.
We break down exactly what’s mandatory in the UK, whilst also advising what other forms of insurance your business may need to appropriately protect themselves.
What Business Insurance Is Legally Required?
The health and safety of employees is something of which every employer is reliable for. Because of this, Employers’ Liability (Compulsory Insurance) Act 1969 was set up to ensure that businesses have at least a minimum level of insurance cover against any such claims. Employers’ liability insurance will enable businesses to meet the cost of compensation for their employees’ injuries or illness whether they are caused on or off site.
This compulsory policy is needed for all businesses to legally operate if you have more than one employee and are situated in the UK, unless you are exempt for one of the following reasons:
- Employers employing family members
- A health service body (national health service board, NHS etc.)
- Any corporation established by/under enactment for or under national ownership (the council of a borough, council of a county, local democracy etc.)
- Commission for Equality and Human Rights (special exemption)
- A small business owner where you are the sole director and own 50% more of the shares
Most insurance providers, including Nordens’ partner insurance firm Primassure, offer Employers’ Liability Insurance as a basic package for businesses. Businesses unwilling to purchase employers’ liability cover can be subject to fines of up to £2,500 for each day they do not have the insurance in place. The law also states businesses must have employers’ liability cover of at least £5m, with the vast majority of policies providing a cover limit of £10m as regular procedure.
As well as this, if your company uses company cars for staff members then you will need motor insurance. Vehicle insurance cover enables you to be protected against claims made by a person who is either injured or their property has been damaged in any way due to an accident caused by your vehicle. Third party insurance is the legal minimum a business or individual requires in order to drive their car. In conjunction with Primassure, Nordens offer a high-quality fleet insurance cover for a group of vehicles under one policy, as well as supercar insurance for those needing a specialist policy for high valued vehicles.
What Business Insurance Is Highly Recommended?
Whilst certain insurances for your businesses aren’t necessarily legal requirement, it is very favourable to purchase certain covers.
Property insurance and contents insurance are highly advised for if your business owns a building or property that operations are carried out in. Buildings insurance covers against the prospect of unexpected damage to the building, for example by a fire or a flood, with options to also cover against accidental damage. Contents insurance covers the possessions within a property such as electrical equipment, furniture, documents, and the possibility that these are stolen or damaged.
Public liability insurance, in similar vein to employers’ liability insurance, covers a person, a business, an event or a contractor for costs from public legal action if they are found liable for death or injury, loss or damage of property, or economic loss resulting from their negligence.
With the pandemic accelerating the so-called digital revolution even faster than expected, most businesses currently use some form of computer or data system in their day-to-day work. Cyber insurance covers the costs or loss of income of data breaches or cybercrime as well the need to repair IT systems. It can also offer protection against claims for non-compliance with GDPR (General Data Protection Regulation). Rather unsurprisingly, many insurance providers have a reported a huge rise in cyber insurance policies being taken out over the past year.
If your business, like Nordens, provides professional advice as a service or offering then you may want to consider professional indemnity insurance. This covers against the cost of defending and settling the liable claims against you for making a mistake, being negligent, or giving poor advice which has resulted in a damaged reputation or financial loss due to the advice given. In many industries, professional bodies and regulators require you to have professional indemnity insurance policy in place, these include accountancy, IT, education, architecture, business consultancy, engineering, design, construction, and surveying.
As well as this, due to the current pandemic and subsequent economic climate HMRC have reportedly launched an increasing number of tax investigations into businesses. Tax insurance protects against these enquiries into businesses, which have shown to be taken longer to investigate and therefore costing more to defend against. Nordens’ have recently partnered with tax insurance provider, Markel Tax, to offer a dedicated and high-quality tax insurance service which safeguards against the possibility of investigations from HMRC into your business. This protection also includes investigations into the Coronavirus Job Retention Scheme, Self-Employment Income Support (SEIS) payments as well as gift aid cover and stamp duty land tax.
We hope this has outlined to you exactly what insurance your business needs and what other insurance policies are highly recommended depending on your industry. If you require any more information on any insurance policies we provide with our trusted partners including Primassure and Markel, or anything accounting related for that matter, please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.