Your Business With James Caan 2017 - 249
etting to grips with the intricacies
of insurance cover can seem
daunting, but it's worth making it a
priority in the initial stages of your
business development. Not only will it
spare you any nasty shocks down the
line, it will also allow you to integrate
the costs into your business plan.
Not having the right insurance
in place can put paid to your plans
before they're even oﬀ the ground,
so it's important to make sure all
your business risks are covered.
With such a vast array of cover
options and packages available to
choose from, understanding the
risks your business faces is essential.
Demonstrating that you're aware
of these risks will also make your
enterprise more attractive to potential
investors and lenders, so it makes
sense to set aside time to think these
through when you're still at the early
planning stages of your business.
It's a good idea to contact several
insurance companies when you are
setting up your business. They will be
able to give you some insight as to the
risks your business could face - issues
that may well inﬂuence your choice of
commercial premises, for example.
WORDS: TRISH LESSLIE | PHOTOGRAPHY: SHUTTERSTOCK
KNOW THE MARKET
Give yourself time to search
for the right policies, because
rushing the process means you
may not get the best deals.
The internet is an indispensable
resource for hunting down the best
insurance deals, with a multitude of
comparison sites to help you research
your options. Moneysupermarket.com,
for example, has a helpful guide
to start-up business insurance.
Important factors you
should consider include:
■ Can you increase the cover as and
when your business grows?
■ Will all your legal costs be covered
in the event of a legal dispute
involving an employee or supplier?
■ What payment options are on oﬀer?
■ Does the policy come with extras
such as advisory support?
Every business needs to take out
certain insurance cover to comply with
the law. Not all of the following may
apply to your business but some of
them will, so make sure you're aware
of your legal insurance requirements.
Most businesses need to take out this
cover to comply with the Employers'
Liability (Compulsory Insurance)
Act 1969. Basically, it covers you
and your staﬀ against injury or
illness as a result of the work
undertaken in your employment.
Ensuring you have this cover will
oﬀer you protection against any
potential claims from employees.
To be classiﬁed as an employee, an
individual must be employed under a
contract of service or apprenticeship.
You need to take out employers'
liability insurance (ELI) for such
insurance must be
for at least £5m
employees, but keep in mind the
contract doesn't have to be written
- it can be spoken or implied.
The mandatory employers' liability
insurance must be for at least £5m of
cover. Failure to obtain this cover can
result in a hefty ﬁne from the Health
& Safety Executive (HSE) - up to
£2,500 for every day you are without
suitable insurance. You could also be
ﬁned up to £1,000 if you fail to display
or make available your certiﬁcate
of insurance to HSE inspectors.
There are some exceptions to this.
Any company that employs only its
owner, and where the owner also
owns 50% or more of the issued share
capital in the company, is exempt.
Also, you don't need ELI to cover
any of your employees who are
based abroad and spend less than
14 days continuously in the UK.
However, you should check whether
the law in the country where they
are based requires you to take out
insurance or employ any other
measures to protect your employees.
Family businesses, where
all the employees are closely
related to you, may not need ELI.
However, if your family business is
incorporated as a limited company,
the ELI rules still apply.
If you think your company may
be exempt from ELI, it's best to
check with the authorities to avoid
potential ﬁnes before opting out.
For more information visit gov.uk/
Some industry-regulating bodies
require that practitioners take out
professional indemnity insurance
(PII). Accountancy, engineering
and surveying are all examples of
professions requiring PII, but you
could also need it if your business
oﬀers advice in a professional capacity.
Whether this be IT, health and
ﬁtness or a service - a photography
studio, for example - you'd be
wise to get cover to protect your
business. A claim from an unhappy
client could have devastating
consequences - you could be faced
with a compensation payout that could
cripple your business. PII should
cover your compensation costs as
well as any legal spend, so it's a vital
consideration for any new enterprise.
PII can cover all of the below,
so it really is worth considering
the extra expense even when this
type of cover isn't compulsory:
■ Professional negligence
■ Loss of data, documents, goods
■ Unintentional breach of copyright
■ Defamation and libel
Whether you use an old van or a ﬂeet
of cars, motor vehicle insurance is
essential. Standard vehicle policies
cover social and domestic use only, so
if you're going to be making trips to see
clients, you'll need a diﬀerent level.