I wouldn’t attempt to deny that business insurance can be a particularly confusing area of insurance. There are many different types of business insurance – including employers’ liability insurance, public liability insurance and motor insurance. It also shouldn’t be overlooked that businesses can be hugely varied in what they do and what procedures and equipment they use. Therefore, you could be uncertain which exact kinds of insurance would be applicable for your firm specifically.
In this article, I will endeavour to clear a lot of the confusion for UK and US readers. As I am based in the UK, there will be a particularly strong British-centric angle to this piece; however, I think business owners on either side of the Atlantic might be able to learn something valuable from these FAQs.
What is employers’ liability insurance?
This kind of insurance, which can be abbreviated as EL, helps a company fund compensation payouts to its workers who, directly due to work they carry out for the firm, fall ill or become injured. If they became blighted in this way, they would be entitled to sue or demand compensation.
Who needs employers’ liability insurance?
EL is legally compulsory for close to every business in the UK. The few UK firms that are exempt include companies without any employees. Thus, for such companies including sole traders and freelancers, there does not have to be pressure to take out EL as soon as the company is formed.
What is public liability insurance?
The name of public liability insurance almost answers this question. Like EL, it is a form of liability insurance; however, it covers not employees but instead members of the public who become ill or injured as a result of your company’s corporate activity. Therefore, it can help you in paying compensation to such people who successfully claim against your organisation.
Who needs public liability insurance?
Unlike EL, public liability insurance is not commonly legally required for UK businesses. However, in practice, you are likely to find forgoing this type of insurance overly risky. The UK Startups website points out that a high number of clients won’t – or even legally can’t – deal with a business that does not have public liability insurance. It is easy, then, to deem public liability insurance obligatory.
Do I need separate motor insurance for my business?
It is legally mandatory for you to have insurance for a vehicle before driving it on any UK roads. However, many people can be confused about the law regarding insurance when vehicles are used for corporate activities. Don’t simply assume that motor insurance you have taken out for leisure use would also cover business activities, as this is not automatic with motor insurance.
Still, look closely at your existing policy, and you might find that it indeed covers you for business use of a vehicle. Furthermore, if it doesn’t, it would not typically be expensive for you to opt for a replacement policy that does; some insurers even freely offer such coverage.
In the US, the law is slightly more grey in this area, as explained on the Entrepreneur site. An employee could use a personal vehicle for a business purpose as simple as visiting the post office – and, if this vehicle is involved in an accident, it will be the personal insurance that initially kicks in. However, anyone involved in this accident could still pursue your company for compensation.
Do I need to make sure that my staff have the right motor insurance?
In the UK, this is indeed your responsibility. All of your staff need motor insurance extending to business use even if their only corporate use of vehicles is occasionally dropping you off for meetings. Also, with assistance from the DVLA, you should verify that these workers can legally drive. Source copies of your staff members’ MOT and insurance documents and driving licences.
Does my home insurance extend to my home-based company?
You might run a business where the activity is rarely, if ever, physically outside your residence. This could be the case if you are a freelancer or have a very new or small business that does not yet have its own office at a distance from your home.
However, you mustn’t be quick to assume that a home insurance policy would cover all of your business operations in the residence. This is an assumption mistakenly made by many entrepreneurs – even though, in the US, most homeowners policies do not cater for business property losses totalling over $2,500 in value. Their coverage also doesn’t extend to losses outside the home.
Those policies also omit liability coverage, which you would hence have to source separately. Another omission is that of coverage for property damage. In the UK, such coverage is provided by public liability insurance – providing another good reason to get this insurance.
How can I find the right business insurance policies for me?
Naturally, when looking for all of the business insurance policies that your firm needs, you will still want to source all of those policies as cost-effectively as possible. To do this, you could obtain different policies from different insurers depending on which of them offer the best deals in which areas. Why limit your choice to that offered by a single insurer?
An insurance broker could help you broaden your choice, as they could source business insurance quotes from various providers. UK business owners could make Be Wiser Business Insurance their choice of broker. This Hampshire-based but nationally available broker’s services can be drawn upon online or by phone. Meanwhile, the forms of business insurance that Be Wiser can help UK employers acquire include employers’ liability insurance, public liability insurance and tradesman insurance.