Is Business Insurance a Legal Requirement?
The only type of business insurance mandatory in the UK is employers’ liability cover, a legal requirement for most businesses that employ staff, even on a casual basis. This type of cover typically pays out compensation to employees who suffer an injury at work and covers any third party visitors injured on the premises.
There are other commercial insurance products available, such as property or public liability insurance, but these are not obligatory except in certain circumstances. For instance, if you intend to work exclusively from your home office, you will need to take steps to arrange suitable building and contents cover. If the nature of your business means that you may have to deal with the public or hire employees, then you will also need to take out suitable cover.
If you would like to read more information or learn more about the pricing of business insurance, you can do so here.
What Types of Business Insurance are Available?
The definition of a business is “an enterprise or organization engaged in the production or distribution of goods and services to customers in exchange for monetary profit.” The word insurance is derived from the word insure, which means “insure” against loss. The UK has taken heavy precautions to ensure that most businesses are insured against their liabilities, such as employers’ and Public Liability.
Employers liability is a legal obligation that requires all businesses that employ staff to carry workers’ compensation insurance. This type of cover typically pays out compensation to employees who suffer an injury at work and covers any third party visitors injured on the premises.
Public Liability is the legal requirement for all businesses operating in a public place. As opposed to workers compensation insurance, which covers employees who are injured on the premises of your business, it includes any third party visitors who are injured on the premises.”
What Does Business Insurance Protect Against?
A business could be put out of action through unforeseen circumstances, such as a natural disaster or a fire. A business is expected to insure itself against many risks – this protects the business, its employees and its creditors. If it becomes unable to continue trading, then insurance will cover the cost of paying off loans and other debts. The company owners are not expected to pay for any of these losses out of their own pockets.
Insurance can also protect against fluctuations in economic performance or currency changes that could make it harder for the business to trade overseas.
The main benefit of taking out commercial insurance is protecting your finances and business earnings against potentially damaging events. Suppose one of your employees is injured and cannot work for an extended period because of their injuries. In that case, this will have a financial impact on your business, as will any compensation claims made against you or if your property is damaged by accident or vandalism. In some instances, you may be able to claim under your household contents insurance.
Still, it is often a better idea to buy specialist commercial insurance, which will provide the appropriate level of cover and will also typically come with an extended period of legal liability cover.
How to Obtain The Correct Level of Cover
The first step in getting a good policy is finding the right cover level. This will depend on the nature of your business and your location. For example, you may need public liability insurance if you run a hotel or restaurant because customers are likely to visit the premises; if you sell items online, then it is unlikely that your products will be damaged, so you probably won’t need any product liability insurance. If you intend to work from home, for example, as a freelance writer or software developer, you will need to arrange building and content cover.
Once you have decided on the type of cover you require for an insurance policy, it is essential to shop around for quotes from different providers. This can be easily achieved online, where many different insurers offer competitively priced business insurance packages.
Is Business Insurance a Legal Requirement? To Conclude:
If you decide to take out commercial insurance, speaking to a professional adviser or broker can help ensure that you get the right type and level of policy. Your business type, how much you are willing to spend, and your budget are just some factors that should be considered when comparing commercial insurance providers.
Find out more about the importance of insurance here.
Other useful links about Business Insurance:
Project Manager Insurance
Property Manager Insurance
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