Getting the right combination of covers
Getting the right combination of covers to protect your business is all about identifying risks and getting the right protection to mitigate the damage these risks could do to your business.
In this guide, we’ve outlined some of the most common business covers, plus questions to ask yourself, to help you determine whether or not they’d be useful to you.
What actually is business insurance – and do I need it?
Like all other types of insurance, business insurance is all about protection from potential financial loss. Whether you’re self-employed, running a small business, or a larger company, business insurance can protect you against unexpected costs you otherwise couldn’t afford.
The key question to ask yourself is, “Could I afford the cost of a claim against my business?”
Given that a claim for even a minor injury could leave you liable for a four-figure payout, it’s considered an essential for most businesses. And at the upper end of the scale, breaching the GDPR could cost your business up to €20 million!
Public liability insurance
Unless your business is run out of a basement and you never ever come into contact with anyone else while working, you’ll want to consider public liability insurance. It’s designed to protect your business against claims arising from injury or damage from anyone (minus employees).
Ask yourself: Is my business customer-facing?
- Yes: If your business deals with members of the public (anyone who isn’t an employee – so this includes contractors and suppliers), public liability insurance is a must.
- No: Even if your business isn’t customer-facing, you’ll likely interact with people at least some of the time. For example, during client visits, or off-site work. What’s more, if you’re entering into a supplier contract within the public sector, a minimum level of £5 million public liability is often required.
Product liability insurance
Whatever role your business plays in the product lifecycle, it’s impossible to have complete control over what happens once it’s in the hands of a customer. If something does go wrong, you could face a claim for injury or damage caused by your product. Product liability protects your business against claims connected to this.
Ask yourself: Does my business sell products?
- Yes: If your business sells products – whether as the manufacturer, supplier or retailer, you’ll want to consider product liability cover. It’s a common misconception that if you’re a retailer or a supplier, you don’t need to worry about product liability – it’s the manufacturer’s problem. It’s not that simple. Even if you’re the supplier or the retailer, you could find yourself liable for any claims against a product you’ve supplied a customer, even if you technically didn’t cause the issue.
- No: If your business doesn’t give away or sell products at all, you don’t necessarily need product liability cover. However, even if you don’t think this includes you, consider that you could be liable for damage or injury caused by something as innocuous as a gift or swag that you’ve sent to a client. In any case, product liability is included automatically with our public liability insurance.
Employers liability insurance
If you have employees, employers liability is a legal requirement. Not having it in place could result in a £2,500 fine for every day you don’t have it.
Ask yourself: Does my business have employees?
- Yes: If your business employs anyone, whether full or part time, employers liability insurance is a legal requirement.
- No: You don’t need employers liability insurance.
Business contents insurance
If you have home contents insurance, you’ll be familiar with this type of cover. Business contents insurance is much the same, but for business contents and equipment, including your documents and cash. It covers damage to your contents and equipment caused by:
- Malicious damage
- Storm damage
Unlike many insurance providers, Superscript can cover contents if you’re based at a coworking space too. Plus we’ll cover your equipment if you’re travelling internationally (for up to 90 days per year).
Ask yourself: Does my business depend on expensive equipment?
- Yes: If your business depends on equipment that would be expensive or unaffordable to replace, you’ll want to consider business contents insurance.
- No: Much like home contents insurance, it’s not a requirement but it’s a very popular choice. We often underestimate how much it’d cost to replace things, so it’s worth drawing up an itinerary to assess how much this could cost.
Professional indemnity insurance
Professional indemnity insurance (PI) provides cover for any professional services (e.g. advice or consulting) provided by your business. It covers you for claims against you if a client suffers a financial loss as a result of your professional services.
Ask yourself: Is my business paid to offer a service?
- Yes: Any advice that turns out to be ill-advised, or service that results in financial loss to your client, could result in them suing you, so you may want to consider PI.
- No: You may not need professional indemnity cover. However, it’s worth bearing in mind that even if your business doesn’t offer advice or a service, our PI cover includes errors and omissions insurance, which covers accidental trademark infringement (e.g. you’ve posted an image that belongs to somebody else, on social media).
Cyber insurance is for every business dependent on using computers and/or holding data.
Even if you correctly implement all the computer security recommendations you can, the impact of an unexpected server outage or a cyber-attack could be devastating to your business – and isn’t necessarily just a matter of a one-off cost.
A data breach could have longer-term implications on your reputation, for example. So in this situation, you’d benefit from the support offered by cyber cover, which includes the help of forensics, PR and legal teams who understand how to deal with cyber crises.
Ask yourself: Does my business operate using computers?
- Yes: You should 100% consider cyber insurance. All computer systems are vulnerable to cyber-attacks and any data you hold is subject to the GDPR, which imposes severe penalties (up to €20m or 4% of annual turnover – whichever is higher) for data breaches.
- No: Are you sure?
Directors and officers insurance
Also known as management liability insurance, and D&O for short, directors and officers insurance covers your directors or management team against claims from employees, the public, regulators, investors or other directors.
Ask yourself: Do I have a management team?
- Yes: Every partnership or limited company includes people with management responsibilities and should therefore consider D&O insurance. An error in a pitch deck or financial reporting, for example, could be potentially ruinous to your employee(s) or an investor.
- No: Unless you’re a sole trader, D&O is a cover to consider.
What insurance do I need if my business is based at a coworking space?
This topic understandably causes some confusion for businesses based at coworking spaces – particularly when it comes to public liability cover. The best thing to do is to treat your business insurance as you would if you were based at a normal office space.
Although areas within a co-working space will likely be covered by the landlord’s public liability insurance, it’s a good idea to have your own cover in place for two reasons. Firstly, so that you take responsibility for dealing with your own claims (it’s much simpler). Secondly, you’ll need to think about the public liability risks your business faces when working elsewhere (e.g. at a client’s office), as your landlord’s public liability cover definitely won’t extend to you beyond your coworking building.
Is business insurance a legal requirement?
Business insurance, with the exception of employers liability insurance which is mandatory for businesses with employees, is not a legal requirement in the UK. However, it’s worth bearing in mind that under certain circumstances, business insurance is a necessity – even though it’s not a legal requirement. For example:
- If you’re renting office or shop space, your landlord will usually require you to have public liability cover, at a minimum.
- If you’re competing for contracts with public sector companies or working with other businesses certain covers may be required as a prerequisite.
How much does business insurance cost?
This will depend on the cover you select for your business. Business insurance with Superscript starts at £5.13 per month.
Bear in mind that it can really pay off to properly identify the risks your business faces and focus on getting the right combination and level of cover to protect you. The cheapest cover may seem like a good economic decision in the short-term, but it could bite back later if you need to make a claim and find that it doesn’t offer sufficient cover.
It can help to start by identifying each risk your business faces, and then asking yourself four high-level questions:
Your business: An online clothing store
Risk: An unexpected week-long server outage
- What insurance is needed to cover this risk? Cyber insurance.
- How likely is this to happen to my business? I’ve experienced an unexpected week-long server outage once before in the last two years.
- How much would this risk cost my business in lost revenue? Last time this happened, it cost my business over £10,000 in lost revenue.
- How much would cover for this risk cost? Cyber cover with Superscript starts at £10.79 per month.
- How much would it cost to make a claim? The excess would be £500, minimum.
Based on this very basic assessment, you may decide that the cost of business insurance is worth it for a risk that could potentially cost your business thousands of pounds.