Making sure that you have the right insurance for your needs is an essential part of successful business planning. Yet over 1 million UK SMEs do not have adequate business insurance and 73% admit to being unaware of the law and its implications for their business, according to British Gas Business*.
When it comes to running a business, most people focus on how to make that business a success with one in three SMEs putting insurance lowest on their start up priority list. But it pays to prepare for when things go wrong. What would you do if your office computer system failed? What if a fire gutted your property, your warehouse got broken into or your delivery van or work tools got stolen? Even as a sole trader working from home, you will have property, income and legal liabilities towards the public that need cover.
Insurance isn‘t just about protecting your property and profit. It‘s also about a legal duty of care towards employees and customers.
By law, any business with employees, must have employer‘s liability cover for a minimum of £5m. This enables businesses to meet the legal fees and any compensation payments for employees injured or made ill at work through fault of the employer. Failing to have this liability cover can result in hefty fines for every day the business is without it. Yet British Gas Business found that 21% of SMEs do not understand the significance of employer‘s liability cover. And around 50,000 small businesses are risking daily fines of £2,500 through employing seasonal/part-time staff without the necessary liability insurance in place.
Additionally, small businesses may also want to consider a business interruption policy to insure against loss of profit or higher overheads resulting, for example, from damaged equipment and public and products liability insurance to cover compensation and legal costs arising from negligence or breach of duty.
Making sure that you have the right insurance for your needs is an essential part of successful business planning. Yet over 1 million UK SMEs do not have adequate business insurance and 73% admit to being unaware of the law and its implications for their business, according to British Gas Business*.
When it comes to running a business, most people focus on how to make that business a success with one in three SMEs putting insurance lowest on their start up priority list. But it pays to prepare for when things go wrong. What would you do if your office computer system failed? What if a fire gutted your property, your warehouse got broken into or your delivery van or work tools got stolen? Even as a sole trader working from home, you will have property, income and legal liabilities towards the public that need cover.
Insurance isn‘t just about protecting your property and profit. It‘s also about a legal duty of care towards employees and customers. By law, any business with employees, must have employer‘s liability cover for a minimum of £5m. This enables businesses to meet the legal fees and any compensation payments for employees injured or made ill at work through fault of the employer. Failing to have this liability cover can result in hefty fines for every day the business is without it. Yet British Gas Business found that 21% of SMEs do not understand the significance of employer‘s liability cover. And around 50,000 small businesses are risking daily fines of £2,500 through employing seasonal/part-time staff without the necessary liability insurance in place.
Additionally, small businesses may also want to consider a business interruption policy to insure against loss of profit or higher overheads resulting, for example, from damaged equipment and public and products liability insurance to cover compensation and legal costs arising from negligence or breach of duty.
Many business insurance policies will cover as standard:
- Buildings & contents
- Business Interruption
- Goods in transit
- Loss of money
- Deterioration of stock
- Public and products liability
- Employer‘s liability
- Legal expenses
- Computer breakdown cover
Many policies will also offer both fixed and variable limits on the cover they provide. This allows you the flexibility to tailor your insurance cover to the needs of your business. Too much insurance cover can mean wasted money over-protecting your assets while too little insurance cover could spell the end of your business. So it pays to get it right.
Before you buy Insurance
- Appoint an insurance adviser
- Undertake a risk assessment of your business – what could go wrong and how would it impact your business?
- Improve your risk management – implement measures/improvements to reduce the likelihood/severity of an incident. This could be a simple as fitting extra fire & burglar alarms, lagging pipes to prevent freezing, fitting surge protectors on electrical equipment right through to extra training for staff and off site back up of critical data
- Review your business continuity arrangements
- Decide on the type and level of insurance for your business
- Compile and validate all information for presentation to insurers in user-friendly format
- Compile underwriting information on your business
- Compare quotes obtained
- Maintain close relationship with your insurer and advise of any change to your business
But where should a SME go for tried and trusted insurance solutions that are tailor-made to provide the best deal for its business? Over 90% of the £22bn business insurance market is currently reliant on independent insurance brokers to seek out the best deals. Research indicates that over 50% of SMEs would prefer to transact online in a self-service approach when researching their insurance needs. But currently only 15% of businesses do this and less than 5% of policies are bought in this way.
Is this because small businesses don‘t want to buy over the internet? Or is it simply that the market has been slow to adopt an online approach to insurance? Commercial director at British Gas Business, Adrian Harvey believes it is the latter. He says: “Unlike the personal insurance market, where internet searching has been truly embraced because it keeps the customer firmly in control, this simply hasn‘t happened in the business insurance market. It is extremely difficult for business owners to quickly search the internet for competitive insurance quotes. They are usually totally reliant on finding a reliable broker and trusting him to do that for them.
“While research tells us that over half of SMEs would prefer to buy their business insurance online, there has never been a dedicated online business insurance comparison service ……until now.”
This month, British Gas Business is launching a powerful new way to compare business insurance policies and quotes online to provide our customers with hassle-free, cost effective insurance solutions they can trust. www.insurance-for-business.co.uk [1], provides a fast, easy route to a wide choice of business insurance and the best possible deals from the UK‘s most trusted insurers such as AXA, Zurich and Norwich Union. The service offers outstanding instant cover for public and employers‘ liability, professional indemnity and more at the click of a button.
Harvey continues:
“Our customers told us that they wanted an online service that takes away the guesswork and provides transparency and objectivity to allow them to make an informed decision on the best insurance cover for their business. Our new business insurance service puts purchasing control back with the customer with the added peace of mind that they‘ll get a range of products and providers to choose from.”
For your competitive business insurance quote, log on now at www.insurance-for-business.co.uk [2]
* Source: Finnaccord survey conducted August 2006