Do I need Insurance for my Small Business?

You are legally required to take out Employer’s Liability (EL) insurance if you employee anyone, even on a casual basis. This is the only insurance that is illegal required to operate your business with in the UK. Some contractors will request you have EL insurance, ensure this is clarified in the contract between you before starting to work with them. If you have employees and operate without EL insurance you could receive a fine of up to £2,500 per day.

This is to cover you and the business if an employee becomes injured or dies whilst carrying out their duties at work.

Your premiums will depend on the type of business and how many employees you have. For example, an office worker could be as low as £60 per annum whereas an employee working in construction could be just over £200. The average to cost to a small or medium sized business in the UK is about £120 per year.

You should read the whole contract through first and if you are unsure about anything ask the service provider or have a lawyer look over it. The main sections to focus on are ‘Insuring Clauses’ and ‘Exclusions’, this can help you clarify what is covered and therefore more likely to result in a pay-out.

If you are going to be using your own vehicle to carry out business activities you may want to add business use to ensure you’re fully covered. Premiums usually only go up by about £30.

This covers you if a client incurs a financial loss from your actions. This could include if you made a mistake or accidentally omitted something during your dealings with the company. The burden of proof lies with them but if a client does decide to take action against you, a case could be costly and time consuming, not to mention stressful. This insurance applies to many different types of businesses from consultant firms to graphic designers so even if at first you think this might not apply to you, it would be worth getting quotes.

This insurance is not a legal requirement in the UK but we would recommend considering taking out a policy if you feel this situation may occur in your line of work.

Public Liability insurance covers you against customers and members of the public making claims if they become injured whilst at your business or as a result of your or your employees’ actions whilst carrying out their duties.

If you regularly come in to contact with the public, we would advise considering this type of insurance.

The average cost of Public Liability for a UK company is about £120 per year however small businesses and sole traders can pay as little as £40 per annum.

There are many different types of insurance out there and we have only covered the three main ones for general business. If you work in a niche industry or with a specialised product/machinery having tailored insurance would be advisable. Always get several quotes to compare, carefully read your policies to ensure you are covered correctly and if in doubt ask a lawyer to look the contract over.