What Insurance do I have to have for my business?

There are insurances that it are very sensible for you to have for your business, but only a few that are required by law.

Employers’ Liability Insurance

If you have any employees then Employers’ Liability insurance is required by law. An ‘employee’ can be considered to be anyone that you pay and is not self-employed. This includes part-time employees, temporary employees, work experience students and even volunteers!

The legal minimum for the cover is £5,000,000, however most insurance covers up to £10,000,000 worth of cover automatically.

This insurance will protect your employees if they fall ill or are injured in the course of their work, it is considered important as it gives protection to employees who have an accident and may not be able to work because of their injuries. Your insurance certificate must be displayed prominently in your workplace where your staff can see it.

You don’t need employer’s liability insurance if your limited company has just one employee, who owns 50% or more of the share capital (i.e. you). It also does not apply to close family members, such as a spouse, parent or children.

There is a fine that can be applied if employers do not take out this insurance which is £2,500 per day and so it is important that employers are aware of their responsibilities towards their staff.

Public Liability Insurance

While Public Liability Insurance isn’t a legal requirement in most instances, you should think about taking out public liability as part of your business insurance policy anyway, as it can protect if someone makes a claim against your business for injury or damage to property suffered because of your business

This is only legally compulsory in a couple of areas:

If you own a horse riding establishment then having Public Liability insurance is a legal necessity and one of the requirements before a local authority will grant a licence
3rd Party Public Liability cover is also required for all vehicles that a business owns.

Public liability insurance covers the cost of claims made by members of the public for incidents that occur in connection with your business activities.

It covers the cost of compensation for personal injuries (including death), loss of or damage to property.

Policies vary from insurer to insurer, but most public liability policies cover you for incidents that occur on your business premises or incidents that take place off-site, at events or activities organised by your company.

Professional Indemnity insurance

Professional indemnity, or PI insurance, gives professional businesses protection against claims made by their clients, for any damage caused by negligent services or advice

Some professions are required to have professional indemnity insurance by their professional bodies or regulators – these include Solicitors, Accountants, Architects, Chartered surveyors, Financial advisers and some healthcare professionals.

Many other businesses choose to take out professional indemnity insurance to protect themselves against claims, and include businesses such as advertising agencies, consultancies, design agencies and social media companies.

Compensation claims can be brought against you even if you provided a service or offered advice for free.

Professional indemnity cover is usually offered on a claims-made basis. This means that your insurer will only cover you for claims that are brought against you during the term of your policy. If a claim is made against you after your policy has expired – even if the incident occurred while your policy was in place – you will not be covered for that claim.

If you cancel your professional indemnity insurance, for example if you are retiring or changing professions, you should consider purchasing a run-off policy. This covers you for any new claims that are brought against you after your professional indemnity insurance has expired.

New claims can be brought against you for up to six years after an alleged negligent act occurred, so your run-off policy should cover you for this period.

If you are changing insurer, a run-off policy will protect you against new claims for incidents that occurred when you were with your previous insurer or your new insurer may agree to cover you for claims relating to prior incidents.