The world of insurance is often a confusing and slightly overwhelming topic for SME owners, especially when you’re just starting out on a new venture and still trying to find your feet.
However, with small and medium-sized enterprises (or SMEs) representing 99% of businesses in the EU, it’s increasingly important to ensure you get the correct cover for your type of business.
But, with so many policies on offer and a deluge of business jargon dominating the insurance world, it can be hard to work out what’s actually necessary.
Here, we give you the low-down on some of the essentials that all SMEs should consider, as well as some more common specialist insurance policies.
Public Liability Insurance
This is an essential cover for all businesses that come into contact with members of the public or external individuals. While it’s not a legally required policy, it’s highly recommended for all SMEs to take out.
This insurance covers your liability towards members of the public and their property should they be injured or damaged through incidents stemming from your business, and can be used to cover legal costs and compensation.
For example, if you own a construction business and damage someone’s car when moving a crane, or if you own a hairdressers and someone trips on a loose wire, this could constitute a claim against your business and could entitle individuals to compensation.
For more information on this insurance, see this post.
Employer’s Liability Insurance
This insurance acts in a similar way as the one above, although in this case covering your employees.
This is a legally required insurance policy if your business employs one or more members of staff, and is used to cover any claims or compensation made by current or former employees for any incidents arising from their employment with you.
While there are some exemptions, such as companies employing family members or those based outside of the UK, SMEs found to be without this insurance can be fined up to £2,500 per day.
This post by constructaquote.com gives you more advice regarding this insurance.
Professional Indemnity Insurance
This insurance is vital for any SMEs providing advice, recommendations or services to members of the public. Again, while it’s not legally required in most professions (although there are some exemptions such as lawyers), it’s highly recommended for most businesses.
Professional indemnity covers your business from any claims made against you by customers who believe that your advice or services have lost them money. It covers breaches/negligence of professional duty; misrepresentation/misstatement; breach of confidentiality; and employee dishonesty, amongst others.
It can be used to cover compensation and legal fees and is particularly useful for small businesses, who often lack the capacity to take on large claims in-house.
This handy guide offers more tips on professional indemnity.
Some specialist insurance policies only affect particular types of business. Below are some of the most common insurance needs for SMEs.
Cyber insurance is essential in this increasingly technological business world. Covering you from cyber-crime and IT risks, it can help to manage any setbacks arising from online incidents of hacking and stolen equipment.
Many SMEs are based around construction, and so a tailored Goods in Transit policy is a necessity for those transporting materials and equipment between sites. This covers any damages or stolen property meaning you don’t have to face any financial hurdles.
For many SMEs employing numerous members of staff, a collection of cars is often required to cover transportation requirements. It’s necessary to take out a specific fleet insurance for these vehicles as personal insurance does not cover business needs.
It’s always best to check with professionals to ensure you get full cover for your business needs.