What kind of insurance does your business require?
Buying insurance for your business can be a tricky and confusing matter. From determining what type of insurance you are legally required to have to ensuring that you have the minimum level of cover, there are numerous pitfalls for business owners, as well as plenty of contradictory information to further confuse the issue. Thankfully, choosing the correct insurance products to suit your company’s needs is actually quite straightforward and largely depends on what type of business you operate, how large it is and what sort of assets you need to protect.
Regardless of what your company does, every business in the United Kingdom that employs one member of staff or more is required by law to have an active Employers’ Liability Insurance policy in place according to the Employers’ Liability Insurance Act 1969. This insurance covers the business in the event that an employee who is injured at work or who become ill as a result of their work for the company makes a claim from compensation. Certain types of businesses – government departments and non-limited family businesses, for example – are exempt but all other companies must comply with the legislation.
The minimum level of cover for an Employers’ Liability Insurance policy is £5 million although most businesses usually take out a higher level of cover, with £10 million a more common figure even for relatively small companies. Depending on the size of your business and the risks involved with the work it does, it may be necessary to pay for a greater level of cover.
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The Health and Safety Executive (HSE) is responsible for enforcing the laws on Employers’ Liability Insurance and can fine businesses who do not have a policy in place up to £2,500 per day. In extreme circumstances, the HSE has the authority to close down businesses who refuse to comply with regulations.
When your business takes out an Employers’ Liability Insurance policy, you will receive a certificate from the insurance provider. This certificate should be displayed in a prominent location to ensure that employees can read it if necessary. Businesses are legally required to keep a copy of this document for a minimum period of forty years and are obliged to show it to the HSE if requested. Failure to comply with either of the above can result in a fine of up to £1000.
It’s important to note that Employer’s Liability Insurance is only valid in the United Kingdom and on offshore platforms in its waters. This means that if your company has employees based outside the UK, you will need to check the employment laws in those countries and take out any necessary policies.
Larger companies may be legally required to take out other policies aside from Employers Liability Insurance. Those businesses that operate any sort of vehicles must take out motor insurance, either in the form of individual policies for each vehicle or ‘fleet’ cover when a larger number of vehicles are involved. Many other businesses are also obliged to take out Professional Indemnity Insurance; lawyers, accountants and financial advisors must have this type of insurance by law.
The author of this article is a part of a digital blogging team who work with brands like Gladiator Insurance. The content contained in this article is for information purposes only and should not be used to make any financial decisions.
