Small business insurance is a funny thing. You hope you'll never need it. But, if you're starting a business, it's usually a good idea – if not essential – to purchase a policy.Here's a look at some reasons why you need small business insurance, how to choose the best coverage and the average costs you can expect to pay.
Why take out small business insurance?
If you run a small business, you need business insurance to protect yourself, your employees and your clients. Typically, you'll need coverage against:
- Losses (financial and time)
- Commercial property damage
- Being sued
- Technical outages
Unexpected costs can hit you where it hurts, so don't get caught out. Plan for your small business's future safety right from the outset.
How do I decide what small business insurance to buy?
Selecting the right policy depends on your business. If you plan on hiring employees, you'll need employers' liability insurance, because it's the law. In contrast, while other types of business insurance aren't obligatory, they may be good to have.Here are some types of insurance policy to consider:
- Public liability insurance coverage protects you from liability if a client is injured or has their property damaged while they're visiting your premises.
- Professional indemnity insurance covers your legal costs should a client sue you for malpractice.
- Cyber insurance protects you from liability if you're hacked or suffer some other form of a data breach or IT issue.
- Buildings insurance keeps your business premises safe if you are targeted by thieves, get flooded or if there's a fire.
- Credit risk insurance keeps you flush even if customers don't pay up.
How do I find the right small business insurance policy?
Step 1: Decide what insurance is essential and which would be 'nice to have'.Step 2: Research the type of coverage that is usually standard. Is there an overlap between benefits? Could you combine more than one cover into a single policy?Step 3: Use a website like Compare the Market to get an idea of what's available and how much you can expect to pay on average.
How do I make business insurance more affordable?
You might find the cost of small business insurance a bit of a shock when you first begin operations. Luckily, there are ways to lower the expense:
- Split your insurance between different insurers: surprisingly, it is not always cheaper to bundle it all with one provider.
- Evaluate your risks and only insure what you need to. No business premises? No need for buildings insurance.
- Make sure all prerequisites of the policy apply to your business; you can negotiate with your broker to remove unnecessary items and bring down your costs.
- Consider opting for a bigger excess payment. This larger contribution means the insurer will pay less in the event of a claim, lowering your premium.
If you need help, take a look at Simply Business to try a simulation.
