Legal Requirements in the UK:
In the UK, business insurance may be compulsory depending on the circumstance. The main example of this, is the Employers Liability Insurance. Any business that has one or more employers is legally required to have Employers Liability Insurance covering a minimum of £5 million under the Employers' Liability (Compulsory Insurance) Act of 1969. This applies to all members of staff whether full time, part time, temporary or even volunteers. This insurance shields companies from lawsuits brought by workers who become ill or are hurt on the job.
Professional Indemnity Insurance (PI) is also legally required depending on the business industry. It is compulsory for businesses who fall under the professions of:
• Chartered Accountants
• Financial Advisors
• Chartered Surveyors
• Architects who are members of RIBA
• Solicitors
Failing to secure the correct overage, may lead to disciplinary action or the disqualification to legally engage in a particular profession.
Protection Against Operational Risks
When first incorporating a business, only your personal finances are protected. This is in the case that if your firm was to experience difficulties, your personal assets are often secure. This however, does not protect the businesses from situations such as:
• Clients suffering injuries on your property
• Customers saying you provided poor advise
• A fire destroying your supplies or machinery
• A cyberattack that steals client information
Only business insurance will be able to protect your business from these kinds of dangers. The most common include:
• Insurance against public liability for claims made by the general public
• Professional indemnity insurance for companies that provide services
• Insurance for tools, tech, or stock as well as contents
• Cyber insurance for data handlers or internet firms
Insurance Helps You Win Clients and Contracts:
Insurance can still remain necessary even if not mandated by the law. There are many clients/ customers who will only do business with a company that has the correct insurance specifically larger organisation or government agencies. These customers will most probably request evidence of insurance before they enter into any contract with the Company.
Therefore, insurance isn’t just about protection, it could also potentially open up opportunities for your business.
Businesses face dangers everyday:
Risks are an inevitable aspect of running a business, regardless of the size of your company. Whether you working from home, have one employee (or none at all), you and your business can still be exposed to numerous accidents, lawsuits and unforeseen circumstances. An example of these can be:
• On your premises, a customer trips and falls
• A fire destroys your inventory or equipment
• Private client data is stolen by a hacker etc.
Having no business insurance would mean that you would have to pay out of pocket if any of these issues arise. These could cost your business serious expenses and could even be enough to ruin your company’s reputation.
How much does insurance cost?
The price of insurance depends on several factors such as; size of company, industry, risk history and claims history of the company. Business insurance can cost a small business between £100 and £500 annually for more basic coverage and between £500 to £2,500 annually for larger companies with require more policies. To ensure you are buying the best package for your company, it is advised to compare quotations from various insurers.
Conclusion:
Although when you incorporate a company in the UK has many legal benefits, it still does not protect business from risks that could arise every day. Securing the appropriate insurance package is a wise investment to protect your company, reputation, and financial stability given the variety of dangers and potential liabilities.
