Business Insurance – What Types of Business Insurance Do You Need?
One way or another, you’re going to need some form of insurance for your business. There will be some policies you may choose purely for peace of mind, whereas others are a necessity. As always, seek advice from a business advisor such as your accountant or solicitor on your particular needs.
There is a golden rule in insurance: If your circumstances change, however slightly, tell your insurance company and get the change included in your policy. Get this wrong and you could find yourself out of pocket in the event of a claim.
Here are the different kinds of insurances typically needed by small businesses.
Public liability
This is protection from third party claims caused by injury or death, or damage done to property as a direct result of your business activities. This is a necessary insurance if any members of the public, clients or customers ever visit your business premises, however infrequent. Public liability insurance should also include legal fees and expenses. This cover typically does not include claims made by your own staff.
Employers’ liability
This obviously only applies if you employ someone and covers claims arising from accidents or sickness, either on or off site. It applies only to employees. You do not have to take out this insurance if you are the sole employee of your limited company.
As a general rule, the definition of an employee is someone for whom you deduct NI contributions and income tax from their salary, and whose working day you control.
The Employer’s Liability Insurance has been made a compulsory form of insurance in Cyprus since the enactment of the Employer’s Liability Compulsory Insurance Act 1997.
Professional indemnity
This is really for businesses that deliver a service, such as accountancy or legal representation – or indeed any business acting in a professional capacity. It is highly recommended for peace of mind. Again, seek professional advice on whether it’s a wise move for your venture. This type of cover is compulsory for all real estate agents as provided by the Estate Agents Law of 1987 and for insurance mediators according to the Insurance Law of 2002.
In a nutshell, PI Insurance protects your business from legal action instigated by unhappy clients over issues such as negligence, infringement of any legal requirements, loss of documents, or dishonesty, such as the theft of a client’s money.
When it comes to deciding how much cover to give yourself, the answer is simple: as much as you can realistically afford.
Equipment insurance
Imagine that you spill coffee down the back of your server. Then imagine having to fork out thousands replacing it? If you don’t like the sound of that, it’s worth considering equipment insurance. This applies whether you work on dedicated business premises, or from home.
Contents insurance
Standard insurance to protect the fixtures and fittings of your premises. If you work from home, please ensure your home contents policy will cover your business venture. If you own rather than rent premises you will need buildings insurance too. Theft Insurance provides cover against loss of or damage to stocks, goods held in trust, machinery, furniture, fittings, office equipment and other contents, caused by actual forcible and violent breaking into or out of the premises or any attempt thereat. This insurance also provides cover against damage to the buildings caused during the breaking into or out of the premises.
Loss of Trade or Loss of Profits
A Loss of Profits covers:-
Loss of Net Profit due to the partial or total stoppage of the business in consequence of FIRE, LIGHTNING, or EXPLOSION in a
building in which gas is not generated and which does not form part of any gasworks’ of GAS used therein for illuminating or domestic
purposes.
Payment of Overheads such as Rent, Rates and Taxes; Interest on Debentures, Mortgages and Loans; Insurance Premiums;
advertising; Salaries and Wages to Employees; Travelling Expenses and like charges which will continue to be payable during
interruption of business.
Increase in Working Expenses necessarily incurred to overcome or to minimize the effects of the fire, such as Rent of temporary
premises, Hire of Machinery, or extra Labour Costs.
Motor insurance
A legal requirement for all vehicles. If you use your own vehicle in the course of business, make sure your insurer is aware of this. Otherwise you may find a claim for an accident during work time may not be covered.
