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Superscript Insurance Blog

What business insurance do I need?

Getting the right cover to protect your business may seem daunting, but it needn’t be. We’ve put together this simple guide to business insurance, with the help of our partner Superscript, to get you started.

by Credit Passport

What business insurance do I need?

All businesses face the very real risk of an accident or unintentional error, which could lead to a legal claim against them. The nature of claims will vary from business to business (depending on the industry, set-up and a number of factors) but for the most part include incidents involving contractual issues, injury, theft or property damage.

Insurance product names may be confusing, but getting the right combination of covers to protect your business is possibly simpler than you think! We’ve enlisted the help of our partner, Superscript, to bring you this simple guide to the different types of business insurance.

Is business insurance mandatory?

The only type of business insurance that’s required by law in the UK is employers’ liability insurance, but this only applies to businesses that have employees – whether full-time, part-time, temporary, or unpaid.

“Although most covers are not required by law, many businesses choose to protect themselves with business insurance because the cost of a claim has the potential to be far more expensive than the comparatively low cost of insurance.”

If you’re a member of a professional organisation or trade body, you may find that your membership requires you to have certain covers. 

What are the types of business insurance?

“Business insurance is an umbrella term which covers a number of different insurance products designed to protect your business against legal and compensation costs arising from a range of risks.”

Public liability insurance

Public liability insurance is one of the most popular covers for businesses across all industries. It covers legal and compensation costs if a member of the public – in this context, anyone who isn’t your employee – is injured, or their property damaged, due to your business’s negligence. 

Employers’ liability insurance

Employers’ liability insurance only applies to businesses that employ people, whether this includes full-time and part-time employees, temporary workers, subcontractors or interns. It’s fairly similar to public liability insurance in terms of what is covered – but concerns employees rather than members of the public. So, this means legal and compensation costs associated with accidental injury to your employees or damage to their property during the course of them carrying out the actions the business asks of them.

It’s worth remembering that if you employ people and you don’t have employers’ liability insurance, you may receive a fine of up to £2,500 for each day you didn’t have it.

Professional Indemnity Insurance

Professional indemnity insurance provides legal and compensation cover for businesses that offer professional services, including advice and consultancy. It’s mostly applicable to companies that work contractually and includes claims like breaches of contract and acts of errors or omissions.

For example, if you were a software developer and the app you created is found to be flawed, causing interruption to the client’s business, professional indemnity insurance may cover legal and compensation costs in relation to this.

Directors and Officers’ Insurance

If your directors or management team have legal or regulatory responsibilities to employees, the public, regulators, investors or other directors, then Directors’ and Officers’ insurance (also known as D&O) is important. If you’re looking to raise funds from investors, it’s probably an essential cover for you as many investors will require a level of D&O cover before investing in your business.

 It offers three kinds of protection: 

  1. Covers directors and officers for fines, penalties and legal expenses.
  2. Reimbursement to the company if it is required to pay fines, penalties or legal expenses on behalf of the director(s).
  3. The company itself, if it’s named in the lawsuit. 

Cyber Insurance

Cyber insurance offers protection for risks concerning your data and computer systems. 

Any businesses working with personally identifiable information (PII), including payment card information (PCI) or medical records (PHI) should consider cyber insurance as an essential cover. 

If you’re still unsure of which business insurance covers you require, our partner Superscript has a useful business insurance guide to help you determine which products you need.

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