Business insurance: the basics

Every decision you make in business should be evaluated on a risk versus reward calculation - and on this premise, you can't afford to take insurance lightly. Every day your business faces the risk of financial disaster from occurrences outside your control, whether it's theft, vandalism, fire or flood. There are also some insurance policies you're legally obligated to have. This guide takes you through what business insurance your business must, and probably should, have:

1. Insurance you need by law
2. Insurance you should have
3. Other insurances to consider
4. Keeping premiums low

1) Insurance you need by law

Employers' liability insurance is compulsory by UK law if you have employees and will cover you against claims made if anyone injures themselves on your premises. If you don't have employers' liability insurance you are liable for prosecution, even if an accident doesn't occur. If you operate a motor vehicle you must legally insure all users of the vehicle.

• If you employ anyone you need employers' liability insurance
• Insure all motor vehicles

2) Insurance you should have

While not legal requirements, several other types of insurance shouldn't be overlooked. If you invite members of the public (even for meetings) onto your premises at any point you should really have public liability insurance as a single claim will often be enough to send most small businesses under. Likewise, if you sell, manufacture or supply products you should have product liability insurance.

• Don't risk your business by skimping on essential insurance
• Look into public and product liability insurance

3) Other insurances to consider

Other insurances depend very much on the type of business you run, although there are common risks that should be assessed and possibly insured again. Consider business interruption insurance should disaster strike and put your business on hold; also look at insuring money, goods in transit, international payments, materials, premises and your fellow directors.

• Assess the risks exclusive to your business and sector
• Consider what would happen if you couldn't trade for a month

4) Keeping premiums low

Business insurance is a competitive market and you should shop around for the best deal. Speak to your bank and search online for comparative quotes. Read the small print and ensure you meet criteria and are insured for enough. Also carry out a risk assessment of your premises and business practices and ask insurers about ways you can reduce premiums, such as increasing security etc.

• Speak to your bank and insurance providers
• Search online for a better deal
• Read the small print
• Carry out a risk assessment to lower premiums

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