If you have recently started a business, you might have come across a lot of information about insurances you should supposedly consider. It's easy to be confused by the various types of insurance, especially if you can't tell from their names what exactly they are meant to cover.
With public liability, employer's liability and professional indemnity all often mentioned as "important" insurances, and many other business covers available to pick up alongside them, you could easily overlook that insurance can, quite simply, prove a surprisingly powerful marketing tool.
Is business insurance really "needed"?
You might find that, at the advent of your business journey, there isn't exactly a pressing need for you to insure your business. Even considering the main insurances, the only one required by UK law is employer's liability insurance, which covers compensation disputes waged by your employees.
Before hiring an employee, whether they will be full-time, part-time or even just working casually or as contractors, you will need this insurance. Otherwise, you would be risking daily fines potentially totalling £2,500 each, as the Startups.co.uk website implies.
While you may be able to forgo even this insurance if each employee will be a closely-related family member like a spouse or parent, you shouldn't run unnecessary financial risks. Indeed, by omitting even some other covers, you could essentially handicap your business while it is eager to grow.
Could public liability save you from public disgrace?
Unlike employer's liability, public liability is not legally required. However, when you are looking for contracts, particularly from the public sector, you could find that many potential clients are unwilling to even consider you. Many public sector contracts even stipulate a specific level of this cover.
The amount of liability necessary for this insurance to cover could reach £10 million. Another possibility is that of membership associations barring your application to them on account of your lack of public liability insurance - and, without being able to advertise your membership of such associations, you could be needlessly hamstrung in your promotional efforts.
As stated in a Business Matters article, "having public liability insurance will give your business a better competitive edge and may even help you to win new business and develop your customer base." That certainly seems like a strong incentive to highlight the cover in your advertising.
What about professional indemnity insurance?
Taking out this type of insurance would be vital if your firm provides advice or a service, such as in consultancy, architecture or accountancy. The cover could financially rescue you if you are accused of negligence or providing poor advice and, subsequently, need to pay a hefty sum in compensation.
The Entrepreneur Handbook site warns that clients may not agree to work with you until after verifying that you hold an up-to-date professional indemnity policy. Therefore, research what level of this cover clients expect.
It's possible to buy professional indemnity and employer's liability alongside public liability insurance in the UK, such as through an insurance broker that will allow you to compare policies.