If you run a small business you will have a lot on your plate, you will most likely be the Owner, Managing Director, HR manager, admin manager and everything else on top! Not only that but it is likely that your own personal finance and the business finance are one of the same, meaning every pound spent is carefully justified. While the right business insurance can provide excellent protection, it is important that all small business owners are aware of the myths before deciding on the cover.
1. It is too complex
If you are unsure what insurance policy your business needs and are daunted by the prospect of reading the small print involved, talk to the experts! You are an entrepreneur and business owner, not an insurance specialist. Experts are on hand to give you advice and ensure your business gets the right cover, it doesn’t need to be stressful. This is the advantage of engaging a broker, they are trained to be able to assess your business’ needs and source appropriate cover. They will also be on hand to assist with any claims should you be in the unfortunate position to suffer loss or damage.
2. You don’t need Business Insurance cover because you work from home
A common myth, but please don’t fall for it. Your home insurance will cover you for many things it probably won’t include business related activities or business monies kept at home. You should let your home insurer know if you work at home, this is a “material fact” and failure to do so may compromise your cover. Whether you are a home-based consultant or beauty therapist a simple home business insurance policy may work for you. This type of policy can offer you the protection you need for your business property i.e. laptops as well as any legal liability you may have for loss of or damage to customers goods or injuries that they sustain .
3. You don’t need business car or van insurance because you drive your personal car
I have standard car insurance that’s all I need right? Wrong, most personal car insurances specifically exclude cover for any business use. This is important because if you do run into some trouble whilst driving to a business lunch or a client visit, your claim may not be paid if you have not had your policy specifically extended to include business use.
4. Business car and van insurance is another way for insurance companies to make money
A common excuse used to justify not getting business car and van insurance is that it is too expensive. Although yes this type of cover is typically more expensive than personal insurance this is only because it takes into account the details of your business, when you drive and the number of miles you expect to drive for business use. If you are dishonest here it could deem your policy invalid – is it really worth it?
5. You don’t need insurance because you work at client locations
In the current climate of “no win no fee” claims culture this is particularly important. If you are a tradesman for example, an electrician or a plumber that goes to clients premises to make repairs, you should have insurance to cover any physical damage or injury you cause at the location. This can be achieved with public liability insurance. This will cover you if you are found to be legally liable for any loss or damage.
6. You can just shut down the business if you get sued
This is only a possible solution if you operate a limited company but you would still have to deal with any lawsuits against the business, which the right policy can help you with. It may seem like the easiest option but do you really want to throw all the hard work away when your insurers could defend any action on your behalf, leaving you to continue to run your business? On the other hand, if you are a sole trader any claims are made against you personally and you will be subject to unlimited personal liability.
7. You need new insurance for each new contract you secure
The majority of small businesses will only need one insurance policy that will cover the company on each contract and project you secure. Unless the contract is unusually complex, large or outside your usual business activity, you won’t need to take out a new policy for each client and an annual policy is a simpler solution . However, your needs may change as your business grows and develops, most policies are flexible and can be amended mid-term to suit your business needs.
8. The guy you usually hire during busy periods is self-employed so doesn’t need insuring.
There are many instances where you will need employers' liability insurance, it is important to make sure these are understood and that you obtain the required cover, as employers' liability insurance is a legal requirement. If someone is working for you and taking direction from you they are deemed to be an employee as far as the law is concerned and it’s a statutory requirement that you have appropriate employers liability cover. This applies also for anyone who volunteers to assist, even if there is no form of remuneration.
9. I don’t have any employees; my business is a simple online business surely I don’t need insurance?
If you are trading online it is worth considering how you would protect yourself against the risk of a cyber-attack. Using the internet, email and any business network exposes you to hacking, fraud, viruses and information misuse. Expensive lawsuits, lost business and damage to your network and reputation could cost you more than you think. It’s a common misconception that online trading carries no risk as often there are no physical assets e.g. stock and machinery to insure but cyber attack could have a greater impact on the business and separate Cyber Liability cover should be considered.
10. All business insurance cover is pretty much the same
The truth is... no two insurances are exactly the same. All have different levels of cover, terms and conditions. Some policies provide specific cover options for different trade sectors so choosing the appropriate policy for your needs can be a daunting task, especially as more policies are traded online without any advice being offered . Employing the services of a professional broker to advise you on the cover tailored to your needs will guide you through the potential pitfalls of purchasing inappropriate or inadequate cover. A good broker will identify your needs and provide an appropriate option and be on hand to offer advice should your business needs change.