Small Business Insurance – what do I need?

We get asked about insurance a lot, and it’s one of those things which you might not know a lot about if this is your first business. We put down a simple guide to the different kinds of insurance which work from home businesses use:

Professional Indemnity:

This covers you if you make a mistake and the client suffers a material loss.  You can indemnify yourself via T&CS/contract, but it could be argued that an element of your fee is for professional services and the client is relying on you to perform your job properly.  So normal cover for SME’s is around £1-2million, but depending on the services you offer, the potential risk might be much higher. Public sector will often expect you to show proof of cover when you pitch for business.

Public Liability:

Lots of work from home businesses think they don’t need this. However, technically if the postie trips on your pathway while delivering business mail, they could claim against you.  If you meet a client in a coffee shop and spill coffee all over their laptop, this would cover you.  The overall cost is about £30 a year, so not a massive amount for peace of mind.

Contents Cover: 

Check your home insurance – usually buried in the small print is a clause about not covering items used for work! Make sure the replacement value is covered – add up how much it would cost to replace computer, printer, and all the software you might have to repurchase.

Cyber Insurance:

This protects your business against losses resulting from cyber attack or hackers… Some cyber insurance will also protect you against accidental data breach – you need to check if this is included. It should cover investigation costs and also costs of continuing in business whilst you sort out the attack. FSB include £10k of 3rd party cyber cover and £5k of first party cover in their standard membership – their average claim for cyber insurance is £3k per claim.

Added extras which you might need depending on the kind of business you run:

Employer’s Insurance:

Legally you MUST have this if you have employees.  That includes if you are a limited company and the sole employee of the company.

Retrospective insurance:

If you’ve been working without professional indemnity cover for some time, you might want to include a retrospective policy which covers work done to date.

Other things to mention when taking out insurance:

Stuff you may need to mention which will affect your cover:

  • Whether you hold credit card details for any clients
  • The size of businesses you work with – some will insist on a much higher level of professional indemnity coverage than is standard
  • What kind of business you run – certain industries carry more risk than others

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