YourBusinessWithJamesCaan2016 - 109

INSURANCE

■ In the event of a legal dispute

involving an employee or supplier,
will all your legal costs be covered?
■ What payment options are on offer?
■ Does the policy come with extras such
as advisory support?

THE ESSENTIALS

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...

EMPLOYERS' LIABILITY

Most businesses need to take out this
kind of cover in order 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 for such 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 £5
million of cover. Failure to obtain this
cover can result in the Health and
Safety Executive (HSE) issuing hefty
fines - 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

Don't think you
can skimp on
insurance - there
are hefty fines if
you don't comply

certificate of insurance to HSE
inspectors.
There are some exceptions to this.
Companies that only employ their
owner, and where he or she also owns
50% or more of the issued share capital
in the company, are exempt.
Also, you don't need employers'
liability insurance 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 of your
employees are closely related to you,
may not need employee liability
insurance. However, if your family
business is incorporated as a limited
company, the rule still applies.
If you think your company may be
exempt, it's best to check with the
authorities before opting out of
employee liability insurance to avoid
potential fines. For more information
see the HSE website at hse.gov.uk

PROFESSIONAL INDEMNITY

Some industry-regulating bodies
require 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 against claims
from unhappy clients, which could
have devastating consequences for
your business.
If a claim is brought against you,
you could be faced with a compensation
payout that could cripple your business.
Professional indemnity insurance
should cover your compensation costs
as well as any legal spend, so it's a vital
consideration for any new business.
PII covers
■ Professional negligence
■ Dishonesty
■ Loss of data/documents/
goods/money

JAMES SAYS
Reading the small print
is imperative when
buying insurance and
attention to detail is
crucial, as is making
sure you have the right
level of cover. You can
be over- or underinsured - either way it
will prove costly
■ Unintentional breach of copyright

and/or confidentiality

■ Defamation and libel

BUSINESS MOTOR VEHICLES

Whether you use a battered old van or a
fleet of cars, motor vehicle insurance is
essential. Standard policies cover only
social and domestic use, but if you're
going to be making trips to see clients
a different level of cover is necessary.
This is due to the fact that you're
more likely to drive further and at
busier times than usual, and therefore
your potential risk of a claim increases,
so if you use your own vehicle for
business purposes, you must inform
your insurer so it can change your cover
to match the new circumstances.
When it comes to getting quotes for
your business car insurance, as well as
the usual information required (your
age, model of car, profession and claim
history), you'll need to detail the nature
of your business and estimated mileage.
There are a variety of policies that are
available, so speak to your insurer for
advice on the relevant cover for you.

109


http://hse.gov.uk

YourBusinessWithJamesCaan2016

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