The COVID-19 pandemic has had a huge impact on the world. While most has been negative there have been some positives that have appeared.
Surprisingly 2020 has seen a notable increase in the number of new businesses formed. Some would have been formed out of necessity due to personal circumstance but it does appear the appetite for starting a business has grown.
Because of this increase in business formation, the demand for business insurance has gone through the roof. According to Google Trends searches for the term "business insurance" increased by more than 50 per cent in 2020.
Because of the increase of new businesses is being driven by first-time entrepreneurs this is their first dealing with business insurance. More people are looking for information on business insurance than ever.
What is business insurance?
Business insurance is a way of protecting your business against losses suffered in the course of your normal activities. This is particularly useful when your business faces a compensation claim.
Much like you have different personal insurances (car, home, life etc) to protect yourself from the events of day-to-day life, your business also needs that protection.
Is business insurance a legal requirement?
This will depend on your type of business. If you have employees then employers liability insurance is legally required. Some other insurances, such as professional indemnity, will depend on the regulatory body in your industry.
What type of business insurance do I need?
Again, this will depend on the type of business you run and the risks your business is likely to face. There are many different type of business insurance.
If you deal with third parties, that could be customers, suppliers or other parties, then you should consider public liability insurance.
If your business consults or offers a professional service professional indemnity insurance would be important. If you handle third party data or intellectual property you should strongly consider professional indemnity insurance.
If you employ one or more people, then it’s highly likely your business is legally required to have employers’ liability insurance.
How much business insurance do I need?
This will depend on the type of risks your business will face. If your business property has assets totalling over £1 million then any coverage will lead to a shortfall if you need to claim on any damage.
If you have staff you’re legally required to have at least £5 million of employers’ liability insurance (unless your business is exempt).
You will also need to consider the level of cover you might need for each of your clients. Check with the guidelines from your regulators or industry governing bodies.
You should look to overestimate as opposed to underestimating how much cover you need.
Can I get business insurance before registering my business?
If you are starting a new business then you can get cover in place before you register your business. When buying business insurance you shouldn't be asked for a company registration number or any other registration details.
Use this article to guide you as much as possible but the kind and amount of insurance your business needs are best decided by you.
Consider the risks your business is likely to face and what costs will be associated with them Check with your regulators and governing bodies to see if there are any legal requirements around business insurance.
Finally, consider the part technology plays in your business and your compliance. If you are not storing customer data correctly or your security does not meet the level regulators will expect you will increase your risk level.
To help Infotech Solutions offer a free IT audit that can review your whole technology setup to make sure you have the right level of security in place and you don't have any unknown exposure that can harm your business.