Tips on Insurance for Small Businesses

Finding the right insurance for small businesses can be a daunting task. Many different types of insurance are available, each with its unique features and benefits. Understanding what kind of coverage you need before shopping around for quotes is essential.

This guide will provide an overview of tips that can help make finding the right insurance easier and more cost-effective. We’ll look at determining which type of coverage best suits your business needs and how to compare quotes from multiple providers to find the most affordable policy.

We’ll also discuss what additional protections may be included in specific policies, such as public liability or property damage protection, so that you can try to ensure your company is fully covered against any potential losses or liabilities.

Insurance Coverage Meaning

Insurance coverage is a type of protection that helps to cover financial costs resulting from an unforeseen event, such as theft, damage, or other potential risks. In order to cover such risks, a business will pay an insurance premium.

7 Top Tips on Finding the Best Small Business Insurance.

1. Do your Research

The first step in getting business insurance is researching and determining what type of coverage you need. There are various types of business insurance, so it’s essential to understand the differences and figure out which one is right for your business.

Look at your business and answer as many of the following questions as you can:

• For employer’s liability insurance, look at the number of employees. When requesting a quote, you might be asked for the total payroll figure, the number of directors, and if they are permanent or temporary.
• For public liability insurance, consider what type of work you are doing and its potential risks. Is there a risk of customers being injured or property damage?
• For other types of coverage like product liability, look at the number and type of products your business sells. Do you need to cover any special equipment used for production or business interruption?
• Business turnover is required; this might be an estimate for a growing business.
• Any previous small business insurance claims and previous insurance history.
• Decide the amount of insurance excess you might want to pay to help reduce the insurance premium.
• Do you have any contractors, and if so, what is the annual expense?
• If you have a premise, they will need details of the property.

2. Choose Where you Want to get Quotes

Small business owners will have several options on where to look to get a quotation. Here are some of the options.

• If you are a member of any business trade organisations, check if they have any discounts available or recommend any companies. An example is I am a member of the Association of Accounting Technicians, and through membership, I get a deal through a specialised insurance company.
• Use a specialist for your trade. Many insurance companies specialise in certain trade types; an example is a public liability for gardeners.
• Check out online comparison sites. These websites allow you to compare multiple quotes for different insurance companies quickly.
• Use an Insurance Broker. Insurance brokers have access to multiple insurance companies, so they can help you compare a range of quotes to find the best deal. They sometimes have more knowledge of the best provider for your business and will do the hard work for you.
• Shopping around for other companies is vital to get the best deal. Get at least three or four quotes from various insurance companies, looking at price and coverage. Make sure you compare like with like by providing all the necessary information and details.

3. Compare Rates of Business Insurance Quotes

Once you know what coverage you need, it’s time to start shopping around and comparing rates from different insurers. Get quotes from multiple companies to compare and find the best rate.

Remember, the cheapest insurance isn’t always the best, especially if it is missing business insurance coverage that is included with other policies. Make sure you are looking at like-for-like quotes on both the insurance covered and the value of cover.

4. Read Reviews

Business insurance cost isn’t the only factor to consider when selecting an insurer. Read reviews from other businesses about customer service, claims processing, or any different experience they may have had with the company.

5. Read the Fine Print on the Small Business Insurance Policy

Before signing on the dotted line, read the fine print of any policy you’re considering. It’s important to understand exactly what is and isn’t covered by your policy so that you can make an informed decision about whether or not it’s right for your business.

6. If paying by Direct Debit, Compare Interest Rates

If you are paying for your business insurance policy by Direct Debit, compare the interest rates from different insurers. Some insurers may offer lower interest rates than others, so it’s worth shopping around and comparing before choosing a policy.

7. Review your Business Insurance Policy Regularly

Your business insurance needs may change over time, so it’s essential to review your policy regularly and ensure it still meets your needs. If your business has grown or changed in any way, be sure to let your insurer know so they can adjust your coverage accordingly.

Types of Insurance for Small Businesses

As a small business owner, it is vital to understand the types of business insurance coverage that may be needed. Business insurance can help protect your company from financial losses due to unexpected events such as property damage, liability claims, and even legal fees.

Many types of business insurance are available for small businesses, including professional indemnity cover, public liability cover, business equipment and more. It’s essential to research each type of policy thoroughly to determine which type best fits your company’s needs.

To help, here is a list of the different small business insurance covers available. This is a guide only; we always suggest you check with the insurance provider on the types of insurance you need.

Professional Indemnity Insurance

Professional indemnity insurance provides a layer of necessary protection for certain professions, especially those offering specialised services. This type of insurance helps to prevent the potential financial risks that may occur through negligent advice, errors, or omissions while providing professional services.

By having a policy in place, businesses and professionals can gain peace of mind knowing they have coverage against all eventualities, whether you’re an engineer, architect or IT contractor.

Although professional indemnity insurance isn’t a legal requirement, it may be necessary to obtain it for peace of mind or if required by a client.

Professional indemnity insurance covers the following:

• In most cases, up to £5 million
• Defence costs
• Compensation claims
• Claims due to advice, designs or mistakes
• Confidentiality breach

Employers Liability Insurance

Employers liability insurance is a legal requirement in the UK if you are an employer. It protects businesses against claims made by employees if they are injured or become ill due to their work. It covers any legal costs, expenses, and compensation that must be paid out should an employee successfully make a claim against the business.

This type of business insurance covers a range of risks, including slips and trips, machinery accidents and work-related stress. It also protects businesses against any potential legal action if an employee is injured or becomes ill due to their job; for example, if they suffer from repetitive strain injury or slip and fall in the workplace.

Public Liability Insurance

Public liability insurance protects businesses against claims made by third parties after an accident. It covers the cost of compensation and legal expenses if a business’s negligence or actions cause injury or damage. You are covered in both your own property and someone else’s.

Stock Insurance

Stock insurance is an essential type of business insurance for companies that keep a large amount of stock on hand. This coverage protects against loss or damage to the stock due to theft, fire, and other unexpected events. Businesses that handle expensive goods may require additional insurance protection to cover potential losses.

Buildings Insurance

Buildings insurance covers any physical damage to the structure of your business premises. This type of business insurance is especially important for businesses that own their buildings or those that lease larger buildings, as it can help protect them against financial losses in the event of a fire, flood, storm, or another disaster.

Business Interruption Insurance

Business interruption insurance covers loss of income due to events that prevent the business from operating. This type of coverage typically kicks in when a natural disaster or another event temporarily forces companies to close their doors, resulting in lost profits due to a lack of customers and operations.

Cyber Insurance

Cyber insurance is an increasingly popular business insurance designed to protect businesses from cyber-attacks and associated financial losses. This coverage can protect against data breaches, ransomware attacks, phishing scams, and other malicious activities.

Vehicle Insurance

If your business uses vehicles, you’ll need to purchase vehicle insurance in order to comply with the law and protect your business from financial losses if an accident were to occur. This type of insurance typically covers the costs of repairs, medical bills, and other fees related to any damage or injury caused by a vehicle accident.

Accounting for Small Business Insurance

Business insurance is an expense and is therefore posted to the profit and loss account as an expense.

If you are using accruals accounting, you will need to ensure that only the proportion of the expense is posted to the accounts for the financial year. The remainder is posted to prepayments. This ensures that your financial statements are accurate and up to date.

For example, a business pays for its annual insurance in advance of 1200, only 5 months relate to this financial year. The accounts will, therefore, show 500 as an expense on the profit and loss the balance of 700 as a prepayment.

Small Business Insurance FAQ

What Business Insurance Do I Need?

Depending on your business, you may need one or more types of business insurance. The most common forms of business insurance are professional indemnity, employers’ liability, public liability, stock, buildings, business interruption and cyber insurance.

Do I Need to Have All Types of Business Insurance?

No – not all businesses require all types of business insurance. It depends on your business size, industry and type of activities. Speak to an insurance broker or specialist to discuss the type of coverage you need for your business.

I’m an Employer. Do I need Employers Liability Insurance?

Yes – Employers’ Liability cover is a legal requirement in the UK. It protects businesses against any work-related claims employees make if they are injured or become ill due to their work.

Should I go with the Cheapest Business Insurance policy?

No – ensuring you get sufficient cover for your business is essential. Opting for the cheapest policy may not provide adequate protection and could expose you if a claim is made against your business. Speak to an insurance expert to ensure you have the right type of coverage for your needs.

I Run a Home-Based Business. Do I need Business Insurance?

Yes – even if you run a home-based business, you may still require some form of business insurance.

Small Business Insurance Conclusion

Small business owners need to consider the types of insurance that are available and determine which ones best meet their needs. Depending on your business type, different risks may be associated with it that require protection from a professional indemnity, employers liability insurance or public liability policy.

Businesses should also consider stock insurance, buildings insurance, business interruption insurance and cyber-insurance policies if they want to ensure they’re fully protected against any potential losses due to unexpected events. No matter your unique situation, understanding all the options available can help you make an informed decision about protecting your small business in case something goes wrong.

Disclaimer

This information on business insurance is intended to inform all website visitors that any information, advice, or materials given in this content are for general informational purposes only and should not be relied upon as legal advice. The material provided on this website does not constitute professional services and should not be construed as such. While we strive to provide accurate and up-to-date information, we make no guarantees about the accuracy, completeness, reliability, or suitability of the information provided.

Read our other small business guides.