Starting and running a business can be risky – that’s just part of the deal. But you don’t have to shoulder all that risk by yourself. That’s what insurance is for!
Whether you’re setting up your first business, or you’re a serial entrepreneur, business insurance provides valuable protection from those unexpected disasters that could threaten your hard work. Plus, some insurance is even required by law.
Do your research
Before you start sourcing quotes, be sure to do plenty of research around the insurance cover that your business needs. For starters, if you employ staff, you’re legally required to have employers’ liability insurance – even if you only employ freelancers and contractors. There could also be some specialist covers that your business has to have, depending on what you do – so check this before going any further.
You’ve probably heard of some of the most common policies, including professional indemnity, public liability, contents and cyber liability insurance. And while these aren’t usually compulsory, not having them could impact your ability to win business and secure investment. What’s more, if events do go awry, they will pick up certain legal, compensation and recovery costs, which could cripple your business.
For the lowdown on all the business policies you should consider, check out our handy blog which has all the details.
Find the right provider
Researching and purchasing business insurance is a lot simpler today than in the past, with a variety of options easily available online. However, it’s worth digging a little deeper to get the right type of cover for your needs.
Your top priority should be finding a provider that specialises in businesses like yours, both in terms of your sector and size. They can only provide well-informed and reliable advice – and tailored cover – if they understand what you do, and the risks involved.
Buying online is a good option if your business has revenues of less than £2m, doesn’t operate in a particularly niche area, or trade abroad. However, if you’re running a larger, more complex organisation then it’s better to talk to a broker, as your level of risk will be higher. They’ll guide you through the process and work with the underwriter to tailor cover for your business activities, rather than offering a generic product.
Don’t just go for the cheapest option
It’s normal to be influenced by cost when choosing a provider, but be wary of opting for what might seem like ‘bargain’ cover. What’s really important is the quality of the insurance. It’s a waste of time and money if, when you come to make a claim, you aren’t actually covered for what you thought you were. So, always look beyond price and read your policy documents carefully so you know you’re sufficiently protected.
Do you need flexibility?
In the past, commercial insurance was always sold as 12-month contracts, but this doesn’t suit many fast-growing businesses, with constantly evolving needs. So, if you need something less restricting, look for a provider that gives you the flexibility to change your cover as your needs evolve and can accommodate your business as it grows. You can now find flexible pay-monthly subscriptions (such as those offered by Digital Risks), enabling you to change or cancel your cover at any time.
Watch out for common pitfalls
Buying business insurance isn’t as complicated as it used to be, but you still need to watch out for a few common pitfalls when buying. Get it wrong and you could find your insurance fails to offer the protection you were expecting.
Disclosure
You must accurately and fully disclose all the details of your business and its activities when purchasing cover. If you fail to do this, the Insurance Act means that your insurer can refuse to cover you in the event of a claim.
Accurate disclosure has become more complex in recent years, as business sectors have rapidly merged and evolved, with the growing influence of technology. It’s important that your insurer is aware of all aspects of your work, so if you’re not sure how to define your business, or it spans multiple business activities, then give your insurer a call and chat it through with them.
Sufficient cover
Various factors influence the level of cover your business will need, including how big you are, the type of products and services you offer and any specific client requirements. Make sure you have enough, or again, you might find you aren’t covered for certain things if and when you come to make a claim. This is a particular issue with contents insurance, so ensure you accurately calculate the value of your belongings when purchasing.
Retroactive date
Another possible issue concerns the date from which your policy is valid – also known as ‘retroactive date’. Problems can arise if, for example, the retroactive date of your policy is May and you face a claim in September, but for work you did in February – in this case, you wouldn’t be covered. To avoid this situation, find a provider like Digital Risks, which has an unlimited retroactive date, to ensure you’re covered for all possible future claims.
Need more advice?
Insurance can be complicated, which is why, if you’re unsure of anything, it’s better to chat it through with an expert. Digital Risks specialises in insurance for startups and small business, with a deep understanding of your needs and the risks you face. So, if you have any queries, questions or you’re not sure what policies you need, don’t hesitate to drop us a line at hello@digitalrisks.co.uk or give us a call on 0333 772 0759.
