smallbusiness.co.uk: Helping your business think big

In the rush to start a new business, it is easy to overlook insuring the venture against disaster. ‘If something terrible happens at the outset, it has a disproportionately bigger effect on the prospects of the business ever becoming a success,’ says James Harrison, managing director of leading online insurer comparison service Insurancewide.com. ‘Buying the right insurance for your business provides both peace of mind that the business is secure and the freedom to run the business with an entrepreneurial spirit.

‘Until last year it was very difficult to purchase professional insurance as personal lines were considerably more popular with UK insurers and brokers. This year, however, there has been a major shift. Several household name insurers are beginning to look at professional lines and the situation can only improve. As a result, the need for effective, independent comparison services that provide insurance-seekers with a fair, balanced view of which products actually suit their requirements will become ever greater.

‘Professional liabilities can be covered by purchasing Professional Indemnity Insurance (PII). Only businesses that provide advice or certain kinds of services require this cover. It protects you against a claim being made due to negligence on your business’ part in its service to the client. Businesses such as accountants, media consultants, translators and IT consultants require this sort of cover.

For example, if you were an accountant and you had failed to take advantage of a tax break for your client, he could sue you for the amount of money that you have lost him due to your negligence. PII covers you for the amount, as well as all the legal expenses incurred.

‘Public liability can be covered through the purchase of a business insurance product such as Tradesman Insurance (if you work from a third party site or from home) or Office Insurance (if you work from commercial premises). Both these types of insurance include protection against claims arising due to your public liability.

If you run a small office, an example of when a claim could be made against you would be if a visitor was using your kettle to make himself a cup of tea and electrocuted himself due to poor wiring. The visitor would then be able to sue you for any damages. Public Liability Insurance covers you against the amount awarded as well as the legal expenses.

‘Most business insurance products – Tradesman Insurance, Office Insurance, and so on – also have an option to insure an amount of stock against certain perils. You can normally choose the level of protection you require, be that just for fire and theft or against all sorts of other potential dangers including employee dishonesty, damage in transit and so on. Ask your broker or insurer to talk you through the options.’

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