What business insurance do you need?

Professional Indemnity insurance is like a safety net for professionals. It's designed to protect you and your business if you provide advice, services, or expertise from potential legal costs and claims made by clients if there are mistakes, errors, or negligence alleged in the services you deliver.

For business owners, especially those in professions like accounting, law, consulting, or healthcare, professional indemnity insurance is crucial. It covers legal expenses and compensation claims if a client believes they've suffered financial loss due to mistakes or inadequate services. This can include situations where the advice given is incorrect, work contains errors, or if there are allegations of professional negligence.

Having this insurance is vital and can give you peace of mind because even the most experienced professionals can make mistakes or face claims from dissatisfied clients. 

Key person insurance is a safeguard for businesses that rely on specific individuals whose expertise, knowledge, or relationships significantly contribute to the company's success.

This type of insurance protects a business in the event of the death or incapacity of a key person within the organisation.

Imagine a business where a particular individual - maybe a founder, a top salesperson, or a key strategist - plays a crucial role. If that person were to unexpectedly pass away or become unable to work due to illness or injury, it could cause financial strain or even threaten the survival of the business.

Key person insurance steps in to alleviate this risk. It provides a financial cushion to help your business recover by compensating for potential loss of revenue, covering hiring/training costs for a replacement, or assisting with any outstanding debts. Essentially, it ensures the continuity of the business during a difficult transition period.

Public liability insurance provides cover for businesses when things go wrong in interactions with the public. It covers the costs that might arise if someone outside the business, like a customer, supplier, or a passerby, gets injured or their property is damaged because of your business's activities.

This insurance is crucial for any business that interacts with the public, even occasionally, because accidents can happen unexpectedly.

For example, it would provide cover if a customer slips and falls in your store or office, or your work accidentally damages someone's property. Without public liability insurance, the costs of legal claims, medical bills, or compensation could severely impact your business's finances.

This insurance covers those expenses, including legal fees, medical costs, or compensation claims that may arise due to incidents involving the public.

It's not just about financial protection, but also maintaining trust and a good reputation. Having this insurance shows that your business takes responsibility and cares about the wellbeing of customers and the public.

Product liability insurance is a critical insurance for businesses that manufacture, distribute, or sell products. It covers the costs that might arise if a product causes harm or injury to someone or damages their property.

It is important to note that all parties along a product supply line, from the manufacturer to the wholesaler to the retailer have potential exposure when it comes to claims related to products supplied.

For example, it will provide cover in the event that a product you sell malfunctioned and caused harm to a consumer. 

This insurance covers those costs, including legal fees, settlements, or medical expenses related to injuries caused by your product. It also helps to maintain trust with consumers, showing that your business stands behind its products and is prepared to handle any unexpected issues that may arise.

Employers’ liability insurance safeguards businesses against legal and compensation expenses from employee claims, either by paying compensation awards where the business is found to have been negligent, or defending the business in court against spurious claims.

Employers’ liability insurance provides compensation in the event of an employee injuring themselves or falling ill as a result of the work they do for you.

The UK Government states that this insurance is mandatory from the moment that you become an employer.

Your policy should be provided by an authorised insurer and cover you for at least £5m

Failing to be covered by employers’ liability insurance can result in fines, with the GOV.UK website stating that 'You can be fined £2,500 every day you are not properly insured.'

In addition, you may be fined up to £1,000 for failing to display your employers' liability insurance certificate, or refusing to make it available to inspectors when requested. You can display this certificate electronically provided all employees know how and where to find the certificate and have reasonable access to it. 

Employers' liability insurance is often arranged as part of a package policy which includes other elements of business insurance.

The premium you pay can be based on several factors including the nature of your business, the number of people you employ and any previous claims you have made.

When a business undertakes hazardous activities such as working at heights, using certain chemicals or machinery, more specialised insurance may be necessary. It is also important to keep your insurance updated due to changes to your circumstances such as new activities.

Having the right employers' liability insurance can also be an important element in winning contracts, as many main contractors will want to see evidence of the cover you have arranged.

Running a business comes with many responsibilities and as a director or officer the proverbial buck stops with you. This means that you can personally be held liable for decisions and actions that are taken. These are referred to as alleged wrongful acts and can include:

• Breach of trust
• Breach of duty
• Neglect
• Error
• Misleading statements
• Wrongful trading

Should a director or officer of your organisation be discovered to have acted outside of their scope of authority, civil, criminal, or regulatory action against them may be pursued.

Director and officer liability insurance covers the costs of defending these proceedings, along with any compensation costs that may occur from an unsuccessful defence.

Claims may be made by regulators, shareholders or investors – eg for failure to act in the company’s best interest, as well as creditors. It also covers claims brought in relation to a breach of legislation or insolvency.

If your directors and officers are uninsured, they face a risk of not being able to defend themselves against disqualification from holding the position of director. These civil proceedings can lead to large legal costs and awards for damages, and criminal prosecution which can lead to fines and possible imprisonment.

Directors' and officers' liability insurance can be supplemented by employment practices liability insurance which covers discrimination claims brought by employees, such as those for wrongful dismissal, harassment, or failure to promote a person.

Material damage insurance covers the physical assets that are crucial for operations, such as buildings, equipment, stock, or machinery. It protects these assets from various risks like fire, theft, natural disasters, or accidental damage.

As these assets are the backbone of your operations, this is an insurance most businesses with physical premises and stock should seriously consider.

This insurance covers scenarios such as a fire destroying your warehouse or a natural disaster damaging expensive machinery. Clearly, the cost of repairing or replacing these assets could be very high, potentially jeopardizing the continuity of the business.

Material damage insurance covers the costs of repairing or replacing damaged or lost assets. It ensures that the business can quickly recover and resume operations without facing a substantial financial burden. Essentially, it safeguards your business against unexpected events that could otherwise severely disrupt or halt operations.

The aim of business interruption insurance is to ensure a business can return to its previous trading position before the interruption occurred.

Most policies will provide cover when damage to the premises or equipment has been caused by fire, storm, or floods. Breakdown of essential equipment is also often covered.

Some, but not all, policies will also provide cover as a result of loss of access to the premises of the business and damage to the premises of a supplier or customer.

A successful claim under this insurance will compensate for pre-tax shortfalls in profits and additional costs of running your business as a direct result of the event, such as extra accounts’ fees you may incur.  

Business interruption cover can be arranged in several ways including by gross profit, revenue or increased costs of working. Professional insurance advice will help to determine which is the most appropriate for your business.

This type of insurance is often included as part of a business insurance package combining a variety of covers, or as an extra optional cover.

When a cyberattack happens, swift professional advice and support is vital. This is where specific cyber insurance can really help.

Cyber insurance policies can provide cover for: 

• Loss or damage to digital assets such as data or software programmes.
• Business interruption cover for network downtime.
• Cyber exhortation.
• Customer notification of a security or privacy breach.
• Reputational damage arising from a breach of data.
• Theft of money or digital assets.

Insurance can also cover your liability to third parties such as your customers for: 

• Security and privacy breaches, and the investigation, defence costs and civil damages.
• Multimedia liability, to cover investigation, defence costs and civil damages arising from defamation, breach of privacy or negligence in publication in electronic or print media.
• Loss of third-party data, including payment of compensation to customers for denial of access, and failure of software and systems.

It is also important to remember that, even with the tightest of defences, it only takes a single person to click on a link, download a file, or accept a transfer from an unusual place to result in an attack. This means staff need to be trained and tested to keep awareness high.

You can see how your current preventative measures stack up by using Green Insurance Group's cyber risk exposure calculator.

Intellectual property (IP) insurance mitigates the financial risks associated with intellectual property infringement claims and defends the value of creative or innovative assets.

If your business is heavily reliant on unique ideas, inventions, trademarks, or creative works, intellectual property insurance is worth serious consideration.

Imagine investing time and resources into developing a trademark, patent, or copyrighted material, only to face a legal dispute claiming infringement. The legal fees and potential damages could be financially crippling.

Intellectual property insurance will cover the costs of a legal defence, settlements, or damages in case of infringement claims related to patents, copyrights, trademarks, or trade secrets. It helps protect your intellectual assets and your business's ability to innovate and compete in the market.

Having IP insurance not only safeguards against financial risks but also encourages creativity and innovation within your business. It gives assurance that your business's intellectual property is protected, allowing you to focus on leveraging and expanding your innovative ideas without the constant fear of potential legal battles eroding their hard-earned value.

Health insurance - also known as private medical insurance - covers the cost of private healthcare.

This cover is no longer considered a luxury by many people. It is often seen as a necessary investment in current and future health and can be vital to keep your business on track by helping to get key people back to work as soon as possible after an illness or medical event. 

Cover can be tailored to specific circumstances and can be adapted as your business grows.

Having health insurance in place can also help you to attract the type of employees you want and aid retention of them. It increases the feel-good factor by letting your staff know they are valued.

You will need to update your insurer if you are using your vehicle for business purposes.