smallbusiness.co.uk: Helping your business think big

Small to medium-sized enterprises (SMEs) are still buying insurance based on its cost, rather than making a comprehensive assessment of their risk exposure and buying insurance accordingly, says insurer Hiscox.

‘It is only when they make a claim that they realise that their losses are not fully covered. Insurance for physical assets such as their office buildings, their contents and equipment are all necessities, but are not useful if they are facing a legal claim. Employment Practices Liability Insurance and Directors & Officers Insurance should complement these policies,’ says Gary Head, underwriting director at Hiscox.

The continued growth in the UK’s compensation culture is very much evident and SMEs are right to worry about legal claims, both spurious and real. With so many considerations to take into account when setting up or running a small business, SME managers and owners could be forgiven for pushing insurance against legal costs down the priority list.

Smallbusiness.co.uk and Hiscox have this set of top tips for approaching your insurance requirements and a guide to different types of insurance:

- Get risk management and insurance on to the boardroom agenda.
- Challenge your broker or your insurance company to find the best policy for you, but be aware ‘best’ does not always mean ‘cheapest’.
- Make sure that you purchase a policy that is tailored to your specific business needs; every insurance policy should be as individual as the company.
- Make sure that you have a policy that is flexible enough to allow you to change it as your risks change.
- Always read the small print.
- Look out for ‘extras’. Some insurers will include online advice on matters such as HR issues. You may or may not need this.
- Understand the track record and experience of your underwriter (not broker) in insuring businesses like yours.

What types of insurance are there and what do they cover?

- Professional indemnity â“ covers you against a legal claim made by a client for allegedly providing bad or incorrect advice.
- Office - contents and computers: covers office equipment.
- Property - covers cost of damage to your premises.
- Employers’ liability - covers your duties of health and safety towards employees. If an employee is injured on the way to work or in the workplace, or even has a breakdown, you should be covered.
- Public liability - covers the welfare of your clients and the general public as well as the consequences of any damage caused to any third party or property by any product or service you provide. A client falling and injuring themself while visiting your offices would be covered, for example.
- Business interruption - covers damage to your business due to a fire, flood or any other covered loss/damage which interrupts your business, along with any reasonable additional expenses incurred in enabling you to continue or return to trading.
- Portable equipment - covers equipment used for business purposes outside of the office; for example work mobile phone or laptop.
- Legal expenses - covers any prosecution or defence costs a business in litigation may face.

For more information visit www.hiscox.co.uk

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