Setting up a business is an exciting time, and insurance is never going to be the first thing on your mind, but it is important to consider it as part of your planning.
Depending on your activities, it could be a significant expense that you need to build into cashflow (do not forget to consider credit costs for instalments). For businesses with physical locations, different postcodes can vary the premium dramatically.
Insurers increasing aversion to flood means in many locations you will not be able to buy flood insurance at all, or it will be subject to a large excess. This might not be something a fledgling business as able to allow for.
The insurance your company will need depends on what you will be doing however there are some core covers you must consider, a couple of these are a legal requirement, and I will start with those.
This is a compulsory insurance where you have employees. Though an employee for insurance is not just a PAYE employee, its anyone working for you, whether paid or not, under your direction and control. If you have chosen to form a limited company, and you will have 2 or more directors you will need this cover.
If you are a sole trader then direct family members are excluded from the requirements.
Just like with a private car, any company cars or commercial vehicles must be insured or declared SORN. Company Car insurance is often more expensive than private car insurance and you will often find, at least at the start, that insuring privately and including business use is the way to go.
An important cover that everyone should have, but is not compulsory by law (except for a few occupations such as riding schools). If you are working with other companies this is the cover they will expect you to have and will often be compulsory under contract.
The cover provided is like Employers Liability, in that it covers your legal liability for Death, Disease, and Injury to members of the public and/or damage to third party property.
Again, rarely a legal requirement but it can be for certain professions. This cover protects the company against legal liability arising from negligent advice or service. Clearly this will apply to training and coaching companies as well as traditional professions, architects, accountants, solicitors etc. However more companies are seeing the benefit of this cover, including care, sports/dance schools.
These covers relate to the physical loss and damage to your own property. As the business grows you will invest in more assets and insurance cover for these is very important to protect your investment.
Linked to this is the business interruption cover which, following a significant loss, will pay an income to the business to replace the income it would have had had the incident not occurred. This is a complex area and advice should be sought to ensure the calculation is correct.
There are many other types of cover a business could look at, including Cyber Liability, Directors and Officers Liability, Goods In Transit, Money, Business Travel.
If you have an accountant, they should be your first stop for business advice. If you don’t have an accountant or they can’t help, BuBul has a wide range of experts available. For more advice on business insurance, contact our expert* Jon on LinkedIn.
*We’ve picked experts we know and trust who are good at what they do. All of them will give you at least an extra 30 minutes free advice if you contact them and would then charge their normal prices. They don’t pay to be on BuBul and don’t give us any money from anything they earn as an expert.