With only a few weeks left until the 2013/2014 tax year begins, many business owners are busy getting their financial statements and other essential paperwork in order. The beginning of the tax year is also a good time to review some basic aspects involved in the management of a company, such as business insurance. Because some elements of business insurance are compulsory, and because of the significant financial investment that insurance represents, choosing the right insurance policy is a priority among many business owners.
But, have you ever shopped around for insurance just to go back home confused by all the jargon? If the answer is yes, this post will help you understand the basic aspects of business insurance so that you can make an informed decision based on your personal needs.
A overview of business insurance in the United Kingdom
The first thing to understand is that there are two types of business insurance in the UK. According to British law, every limited company must have a valid business insurance policy in place. This type of insurance is called employer’s liability insurance, and its function is to provide cover to all employees against accidents at work and illness. The law states that the minimum value of employer’s liability insurance is £5 million. Current legislation also requires business owners to display the current year’s certificate of insurance at a place that is visible to all employees and to Health and Safety inspectors. It is also compulsory to keep all past certificates of insurance (for a period of up to 40 years) in a safe place. Failure to comply with these requirements may lead to fines of at least £1,000 and to prosecution.
It is also important to note that if you have any company vehicles registered to your business, you must also purchase motor vehicle liability insurance. Your motor vehicle insurance policy should cover at the very least theft, fire, and third party damages.
In addition to employer’s liability insurance, there are other types of optional business insurance that may be worth considering in order to give you additional peace of mind. But first of all, it is important to remember that businesses have different needs and that what works for one company in terms of insurance does not necessarily have to work for another.
For example, professional indemnity insurance is a must for businesses involved in law, finance, accountancy, and for certain health care professionals. This type of insurance covers policy holders in cases where a customer or patient claims negligence, but it is also useful in other types of businesses, and is strongly recommended for consultants regardless of their field.
Consequential loss or business interruption insurance is another optional but advisable type of business insurance. This type of policy will cover any costs incurred by accidental disruption to your business activities (such as a natural disaster or a fire), as well as any losses resulting from temporary closure.
Retail businesses must consider shop insurance too, as this insurance type will cover not only damages caused to the shop premises, but also the shop’s stock and any goods that may be damaged in transit. Money insurance is recommended for businesses that regularly keep cash in their premises or transport it regularly.
To sum up, business insurance is an excellent way of protecting your business and your employees against some eventualities that could have serious consequences if your business was uninsured. As many business owners may agree, you simply cannot put a price on peace of mind, especially when it comes to the well-being of your staff and to the continuity of your source of income. So why not start the financial year with a business insurance policy that is just right for you?