Ensure You Are Insured
Insurance is about making sure that you can take risks and that the consequences for you are less serious if something goes wrong. The most common risks for someone starting a business are:
- Death either by accident, ill health or other “acts of God”
- Theft, loss or damage to your equipment or office contents
- Serious injury that affects your ability to make sales
- Travel risks including motoring
- Giving advice which turns bad when your customers follow it
- Having customers or employees hurt or injured at a workplace
- Having customers injured while you are working on their premises
These days, unfortunately, you need to make sure that you have covered all these risks because there are plenty of people who will seek to make or recover a lot of money from you if they can find a way of making you responsible for what happened.
Life
First consider your life insurance. Do you want to provide for anyone if you die? If you do then how much and for how long?
Roland Butter has two children aged 6 and 4. He earns £30k a year and is starting his own business. He wants to make sure he has enough life cover until the children are 18. His youngest is 4 so 18 minus 4 is 14 years. 14 years x £30k is £420,000. This seems high but takes no account of inflation or rising costs over those 14 years.
Illness
Investigate Critical Illness cover. For some it is an expensive luxury while others swear by it. At the very minimum consider creating an emergency fund equivalent to three months income.
Motor
Ask your car insurer about using your private car for business. Many policies include this anyway. If you travel abroad consider Annual Travel Insurance.
Professional Indemnity
If you give advice of any kind, you’ll need Professional Indemnity cover. Check your trade association or professional body who may have a special deal for members. And shop around because premiums vary.
Roland Butter finds that cover costs about £100 per £1 million for his consultancy. He is shocked to find that his mate Ian who runs a scaffolding business faces premiums of £3,000 a year or more for a similar level of cover.
Public and Employers Liability
If you work on client premises or in their home and if you invite customers somewhere or to something you are running, Public Liability cover is a must. Again, shop around. If you employ people you will also need Employer’s Liability cover.
Equipment and contents
Think carefully about insurance for any equipment or premises you may have. Some people find that the excess on these policies is so high that it easier to self insure and buy new tools and equipment when needed.
How Do I Find Insurance For Business?
Remember that your insurance premiums are a business expense and there is a ready, although small, market in selling these policies. Most of the big banks have suitable cover which you can find on their business websites. There are also a number of specialists in the market and you should certainly check with your trade body or professional institute who may have special deals for members. Visit www.gocompare.com and search for “public liability”
There are some links on the links page to get you started
Checklist for Insurance
- I have adequate life insurance that covers more than my survival budget
- I have checked with my motor insurer about using my car for business
- I have professional indemnity cover
- I have public liability cover
- I have assessed the risk of losing my contents and equipment
