Liability Insurance For Small Business - The guide on this site is based on our analysis and is designed to help you identify options and narrow down your options. We do not advise or tell you which product to buy; You should think carefully before entering into any contract. Read our full story here.
In this guide we explain the features of small business insurance in the UK, including examples so you can see how different types of cover work and decide which is best for you. The right business insurance isn't just financial protection, it can also help save your small business and run it in the event of a disaster.
Liability Insurance For Small Business
Business insurance is a set of coverage designed to protect a business from certain accidents and financial losses, such as compensation claims. Business insurance is used as a risk management tool by businesses of all sizes from sole traders to large corporations.
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The table below provides a brief overview of the types of business insurance that can be covered. If you want to read more about this information, check out the glossary section at the end of this guide.
It covers legal fees and compensation costs due to personal injury or damage claims made by third parties.
Covers legal fees and compensation costs resulting from customer claims that your negligent advice or service caused them to suffer.
Covers repair, reconstruction or replacement of business premises and contents in the event of fire, flood or theft. Buildings, property, business equipment, tools, furniture and more can be protected.
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Provides access to an expert support team and covers lost revenue due to hacks, data breaches, viruses and other cybercrime - both direct costs incurred by your business and third party claims in avoid attacks on your business systems.
Provides access to specialist legal staff and covers your legal defense costs in a number of situations such as employment disputes, HMRC tax enquiries, failed health and safety checks, contract disputes, debt recovery, asset protection , identity theft etc.
To help you better understand how these business insurance products work in real life, here are some hypothetical business insurance examples.
A business (the policy owner) signs a contract called an 'insurance policy' with an insurance company. As part of this contract, the policyholder pays a small amount (the premium) to the insurer, in exchange for which the insurer will pay valid claims made by the business (exclude the excess). A business insurance policy can be paid annually (ie in advance) or monthly. Monthly payments include bank charges to make it more affordable to spread the cash payments throughout the year.
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The insurance period is the length of time the insurance contract is valid. Most business insurance policies are for one year and must be renewed annually. When it's time to renew, your insurance company will increase (or decrease). Or we will not send you an update. This can happen if your information changes and the insurance company re-evaluates the risk of your business insurance, for example. For example, an insurance company may not update its own internal risk assessment, for example if it reduces the offering of certain types of business insurance or covers certain businesses or industries.
Yes, you can cancel your business insurance during the insurance period if you no longer need it. There is usually an administration fee (eg £50), which may be higher if you have used a broker as both the broker and the insurance provider may pay a cancellation fee.
If you paid your insurance premium in advance (ie you pay it every year) then you are entitled to a refund. If the refund is calculated normally, you will only be charged for the period from your start date to the cancellation date. For example, if you cancel in the middle of the year, you should get 50% of your money back (minus administration fees). However, some insurers will refund a smaller portion of the premium than the equivalent amount.
If you pay for your business insurance monthly, you must continue to pay until you are in compliance with the terms of the agreement. If the company does not operate on a consistent basis, you may be required to pay a final payment that reflects the additional amount owed to the insurer, even if you terminate the coverage.
General Liability Insurance Quote
The insurance limit is the maximum amount that the insurance company will pay for claims during the insurance period. The insurance limit means that you will know when you buy a policy, and you can choose an insurance limit that suits your needs. For example, employers' liability insurance is sold with a minimum premium of £5 million (the minimum amount required by law) but higher sums are available.
A claim is when you ask the insurance company to pay for the loss covered by your insurance policy. To file a business insurance claim, notify your insurance company as soon as possible. Insurers may not honor valid claims if they are not submitted on time. You can check your policy wording to see if there are specific areas for making claims with your insurer, or if there are any specific steps you must follow as part of the claims process.
The excess is the amount you must contribute to the claim before the insurance company will pay its share of your loss. Essentially, you and the insurer agree to pay the losses covered by your insurance - you pay the excess and they pay the balance (up to the insurance limit).
For example, if you have a £5,000 claim on your business insurance and a £500 deductible, then you will pay £500 of the loss and the insurance company will pay the remaining £4,500.
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A Certificate of Insurance (COI) is a document that proves the existence of a valid insurance policy. The COI lists the name of the insured, type of coverage and effective dates, among other things. This will be provided by your broker or insurance company. Third parties such as consumers may ask to see a COI to prove you have the right coverage; Additionally, there may be situations where you need to see another party's COI.
Yes, most small businesses purchase some form of business insurance. There is only one legal requirement when it comes to small business insurance, employers liability insurance. A small business must have employers' liability insurance if it hires employees.
A business may also need liability insurance if it is a member of a trade association, or if it is required by partners, customers or contractors. In addition, insurance is a good idea for all small businesses - but different businesses consider different types and limits of insurance. Without adequate insurance, your company may face difficulties in difficult situations such as lawsuits or financial losses that can be mitigated by proper insurance.
For example, even if the liability claim against your small business is small and you did nothing wrong, if you are sued you will still need to hire professional and legal staff to defend your business - potentially costing thousands and a thousand pounds. It's not just the right insurance that costs, you also need help finding the right experts - this is a big budget for very small businesses, because they don't have an in-house lawyer. In addition, liability insurance can also cover the compensation that you pay when you are found to be entitled; These can fly up to tens, hundreds of thousands of pounds or more.
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When you need public liability insurance: One of the most common types of small business liability insurance is public liability insurance, which protects against claims for injury or damage caused by third parties. Public liability insurance applies if the business exposes customers or other members of the public, including suppliers or your landlord, for example.
When you need professional indemnity insurance: If you are a small business (e.g. you or your employees) who provide advice and provide professional services (e.g. architects, designers, lawyers, etc.) , professional indemnity insurance can protect the claims of customers who claim them. lost money because your company didn't do it right or did it wrong. Small businesses engaged in accounting, architecture, engineering, surveying, law, financial consulting and insurance marketing are required by legal or professional bodies to have professional liability insurance.
When you need employers' liability insurance: If you hire employees, whether temporary or temporary, your small business is required by law to have liability insurance and employers in most cases.
Of course, many businesses decide they need other types of coverage such as some type of commercial property insurance.
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There are many options for buying business insurance in the UK market. With each of these options, we want to point out if you're not sure which coverage you need.
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