Business Insurance - what is it, why do I need it, what do I need and do I have enough?

It's no secret, business insurance is often seen as incredibly uninteresting, associated with negative connotations of spending money, theft, property damage and accidents. However, it IS required by anyone who owns or runs a business with the exceptions of sole trader. It is also actually incredibly important to support good safe growth. A crucial foundation for any independent business that luckily (and hopefully!) you only need to think about once a year, at time of renewal.

What is business insurance?

Why do I need it?

What actual cover do I need?

How do I prevent being underinsured?

Four important questions, that we answer for you below in as interesting and informative way as we can, giving you the knowledge required to select the best independent business insurance for you.

What is business insurance?

Simply put, business insurance protects your business when things go wrong, helping you replace faulty or broken items and offering protection from large pay-outs.

Despite the best efforts of any business the world can throw up some problems for you, bad things can happen, some common and some very unusual. Businesses should look to insure the cost of replacing stock along with general contents such as the fixtures and fittings that give personality to your space. Common reasons for a claim include fire, theft, and flood.

Insurance also protects you from unforeseen incidents relating to your products, services, staff or even yourself, ranging from a slip on the floor to damage to property.

Solid business insurance gives you the confidence that if you need to make a claim your insurer will help your business to get back up and running as quickly as possible. It also demonstrates to customers and employees you are a responsible, dependable member of the independent high street community, with their best interests at heart.

What actual cover do you need by law?

Employers Liability Insurance  - It is a legal requirement if you employ staff, even seasonal ones. This provides cover if an employee is injured or suffered illness as a result of working for you. If you are found legally liable for the injury, your insurance would pay the damages, including claimant's costs and expenses.

A common scenario is a slip or trip, for example: 'you forgot to repair a loose tile and an employee trips over it breaking their ankle' (A good reminder - fix anything like this when you first spot it).

At this point it is important to be aware that Employers Liability will cover how many employees you have at any certain time. If you do not have Employers Liability, the Health and Safety Executive (HSE) can fine you £2,500 for each day you don’t have it, with a further £1,000 daily fine for not displaying it.

https://www.hse.gov.uk/pubns/hse40.PDF

https://www.gov.uk/employers-liability-insurance

What other cover might you need?

Public Liability - Your independent shop/restaurant is all about your customers, a safe business reflects both the love for your business and wellbeing of your customers. Making your shop, café, or restaurant welcoming, clean and safe shows the care and attention you place on running your business. Support this with by ensuring customers are protected under Public Liability cover.

Public liability insurance covers you if a client, customer, or member of the public claims to have been injured or have their property damaged as a result of your business activities and would pay the damages, including claimant's costs and expenses.

If you host small local events to support your business, building deeper links with your customers such as wine tasting, book reading or a fashion event it would be good to check for Public Liability cover that includes this.

No scare mongering intended, even the most innocuous seeming slip could lead to catastrophic injuries which are very costly, so having a good level of protection here is key for peace of mind.  Expression Insurance packages start at £2m Public Liability for small shops and moves up to £5m Public Liability cover for medium and large.

Product Liability - If a member of the public (most likely one of your customers)  is injured or their property damaged by one of the products you have sold, and you are found legally liable, Product Liability would pay the damages, including claimant's costs and expenses.

For example, a customer buys a faulty household item which causes a fire, burning down their house. Or you serve a nice meal and the customer bites down on a piece of metal that breaks their tooth. (You no doubt source top quality products and would never experience such scenarios, but it's good to know this cover is here to give you peace of mind)

Stock Cover - Insures the cost of replacing your stock if it is damaged. Remember, here is where flexibility is key when planning your stock cover, ensuring you not only have the level of cover required for normal trading but also ample cover during your seasonal peak, preventing being under insured.

Goods in Transit - It’s good to think about how your stock gets to your customers. If you do deliveries, you will need cover for when your stock is out on the road.

Contents Cover - Insures the cost of replacing your contents if they are damaged.

Legal Expenses - Cover for employment, property and tax disputes.

Business Electronics - Insures the cost of replacing, repairing, or restoring your computer and electronic equipment.

Computer and business records – Payment for damage to documents, manuscripts, business books and computer system records

Theft by employees - Independent businesses tend to have very good employees who are invested in the company and have a high level of integrity. However, if you were to encounter a bad egg, this cover will help to protect you for a loss of money or property resulting from any acts of fraud or dishonesty by any of your employees.

Business interruption - If your business is forced to close, for example due to a fire or flood, this cover is for the additional expenses you incur, such as moving to a temporary location to continue trading

Frozen food – Deterioration of stock cover - This is included if you store food in freezers / refrigerators and would provide cover if the unit were to fail and the food was ruined as a result

Money & Assault - Protects you against theft of money in various scenarios

Loss of License - If your alcohol license is suspended or withdrawn

Book debts – Covers if your accounts, business books or records are damaged, most commonly from a fire or flood

Cyber cover – helps a business pay for any financial losses they may incur in the event of a cyberattack or data breach

How do you prevent being underinsured?

Underinsurance occurs if the sum insured does not provide enough to cover the cost of damage or loss to items listed under your policy in the event of a claim.

Reviewing your policy accurately and calculating the level of cover, not only at the start of a new policy but also at time of renewal, ensures you have enough cover in place should a claim arise and safeguards your business to financial risk and having to cover any shortfall yourself.

· Has your stock and/or contents increased from the previous year?

· Due to the success and growth of your business has the number of employees increased?

· Has the value of your building increased?

· Are you planning to host small local events?

· Do you have a pavement dining area?

· Have you introduced charcoal cooking to your restaurant or café?

Taking time to assess cover levels, and where needed revaluate the level of cover required, provides you with the confidence that should the unforeseen and unfortunate happen the financial cost will be met.

What next?

To sum up, business insurance is a service that you pay for and one that you hope you never have to call upon to use. It adds value by protecting not only yourself and your customers but also protects your business that you have worked so tirelessly to nurture and be a success. You're paying for certainty - a fixed premium in exchange for knowing a potentially costly claim would be covered by your insurers.

Selecting the right cover for you and your small business does not have to be complicated. Look for Insurance that is easy to understand, offers the cover you require, is competitively priced and provides a great claims service. If this is put together in a plain-English, time saving way, then all the better, enabling you to do more exciting things!

You need to fulfil your part of the insurance bargain too, by taking reasonable precautions to prevent bad things happening. This means having appropriate security precautions in place, maintaining your property properly and obeying the law – especially in terms of health and safety. If both sides do the right thing, insurance should not be complicated.

Expression are fans of independent businesses, just like yours. You aren’t a number; you are creative and unique, owning your own niche on the high street. Whether you sell fashion, provide fabulous homeware, or offer a café or restaurant experience - cultivating long-term relationships and building trust within your customer community is important.

If you want to find out more about how Expression supports independent business owners who love their business visit www.expressioninsurance.co.uk