The significance of business insurance is not something you should take lightly, especially if you’re an SME.

The significance of business insurance is not something you should take lightly, especially if you’re an SME.

Any sensible owner-manger will know that it’s imperative that a company is covered against all eventualities and this may require that an organisation takes out a range of different policies.

You need to ensure that you’re protected against possible claims from your clients, the public and even your employees. Small businesses in particular are vulnerable to the cashflow problems that can result from unexpected claims against them from any of these groups.

Professional indemnity insurance is among the first type of cover that a business should look into acquiring. After all, clients may make a claim against you if they believe that the advice you gave was incorrect, and however much you pride yourself on delivering a top-quality service as a business, mistakes can happen.

If you run a business that involves giving advice to clients, then investing in professional indemnity insurance is highly advisable, and some industry associations require their members to have it as part of their code of practice.

It is not only clients that can trigger a claim against you. Your own members of staff could sue you for compensation and to ensure that you’re covered you will need employers liability insurance. This is a legal requirement if you hire employees, whatever capacity they work for you in, and you could be liable to have to pay an expensive fine if your business does not have the correct insurance.

As a reputable business, there is no doubt that you will do your utmost to limit the risks that your employees face, but these risks cannot be removed completely. Something as simple as one of your employees tripping over a loose cable in the office could result in a serious injury and therefore them making a claim against you.

You won’t have failed to notice the increased regularity in which advertisements for no-win no-fee legal services are appearing on our televisions. This is one reason why you should protect your business with the correct public liability insurance. Whether members of the public visit your office or you visit clients’ homes to carry out work, should you injure them or cause damage to their property then your business could be liable. If it is deemed that your company is at fault then you’ll have to pay compensation.

It isn’t just your actions that could trigger a claim either; those of your employees could result in your business being liable. If a member of staff has caused an injury to a client, then they’re the responsibility of your company. It is also worth bearing in mind that if you carry out work for another organisation, they are likely to require that you have the necessary insurance.   

Insurance is something that is required across a number of different aspects of life and your business. Having the correct business insurance will not only give you peace of mind, but it would also protect you from a substantial economic loss should you be liable to a claim made by one of your clients, employees or a member of the public.

See also: What insurance do I need for a home-based business?

Related topics: Indemnity insurance, Small Business