Ensure you insure to avoid any problems

May 6 2008 by Sue Scott, Evening Gazette

STARTING out in business for the first time is both exciting and daunting.

But as well as incorporating the company and arranging your accountancy and taxation, one of the most important issues to address at the outset is insurance.

A broker will be able to offer professional advice but it is quite simple to divide insurance into ‘must have’ cover - that you are required to have by law, and other insurances that are highly recommended for the safe and continued operation of your business.

There are three must haves - employer’s liability insurance if you have staff, engineering insurance if you use certain types of machinery, and motor vehicle insurance:

Employers liability - if you are planning to employ staff or if you are a limited company you must have employers liability cover (EL). EL is there to meet the cost of compensation and legal fees for employees, paid or unpaid, who may be injured or made ill as a result of their activities while working for you through the fault or negligence of you, the employer. It covers all employees including members of your family. Although husbands, wives, partners and children can be exempt by law it may still be in your interests to include them in your insurance arrangements.

Engineering insurance - by law you may be required to have some equipment regularly inspected; your insurance broker can advise on this.

Motor insurance - by law any motor vehicles owned or run by you or your business must be insured. Your policy can be third party or it can be fully comprehensive. If you are planning to use your personal vehicle for the business you must check with your insurer that you have the correct class of use.

You might also want to think about breakdown insurance and GAP insurance. - which covers the ‘gap’ between the market value of your car at the time of any accident and the price you paid for it.

Other useful insurances include:

Public Liability Insurance - cover for if members of the public visit you, or you visit them. It covers the award of damages to a member of the public as a result of a personal injury or damage caused by the negligence of you or your business.

Directors and Officers Insurance (D&O) - directors and officers of a business or organisation can be held personally responsible for a range of issues including heath and safety, bad financial practice, negligence and data protection.

Key Man Insurance - this will subsidise the increased cost of continuing your business if you or any other ‘key’ employee is absent for a prolonged period.

Contents And Stock Insurance - this can cover plant and machinery or office furniture and equipment which, in the event of damage by perils or accident, will need to be repaired or replaced.

Goods In Transit Insurance - if you send goods out by carrier or in your own vehicles, goods in transit insurance is recommended.

Money or Cash Insurance - if you carry money, stamps or crossed cheques off the premises or in transit, money insurance cover is recommended.

Premises Insurance - if you run your business from rented premises you should check with the property owner to ensure you are insured for any risks arising from any damage by perils or accident linked to the premises.

Tools Insurance - this will protect you from the replacement cost of lost tools.

Product Liability Insurance - this covers you against compensation awards as a result of damage or personal injury caused by your negligent product. Beware, however, as products liability may not cover you against being sued for financial losses to a business or person caused by a faulty product you have supplied, serviced or manufactured.

Products liability may cover you against the implications of unforeseen circumstances such as product faults or failures which you were not able to see prior to the event.

Professional Indemnity Insurance (PI) - if you give professional advice to others either for a fee or for free you should have PI insurance.