How Necessary Is It To Have Business Insurance?

The modern day entrepreneur faces a number of unique challenges when starting a new business beyond simply making it successful. One of the major hurdles is evaluating and protecting your business against unforeseen risks.

Fortunately, there are a variety of insurance products that provide a safety net in the event of a lawsuit. Some, such as employers’ liability insurance, are compulsory by law for any business that employs a staff. Other insurance products, such as professional indemnity, restaurant, or office cover, are unique to certain professions. However, most businesses will need some form of insurance to protect them in the event they are liable for injury or property damage to a client. This is known in the industry as public liability insurance.

Public Liability Insurance

An essential cover for any business, public liability insurance is designed to safeguard your business against a lawsuit brought about by third party individuals. This includes interactions with clients, customers, or general members of the public. Any business that deals with outside parties, regardless how limited their exposure, is at risk for such a claim.

Typically, a public liability insurance policy will aim to cover the following:

  • Legal fees and representation
  • Medical bills and payments to the NHS
  • Compensation due to the claimant

Examples of Public Liability Protection
The following are two examples where public liability insurance can protect your business:

  • A self-employed computer technician is hired by a company to do an examination of the network systems, when he accidentally spills hot coffee on one of his client’s desks. The coffee burns the client and spills on his tablet computer, damaging it irrevocably. In this instance, the technician is liable for both the client’s injuries, the cost of the computer, as well as the loss of any data stored on the device.
  • An electrician is hired to change the fuses for an corporate building, but accidentally damages the wiring, causing a power outage. As the corporation relies on having power to run its business, the resulting downtime could result in huge losses for the company.

Given the high cost of medical and legal representation and the potential for large scale liability, many professions require coverage of anywhere from £1 to £10 million in order to do business. For other companies, the purchase of public liability insurance may not be mandatory, but clients will often use it to determine whether a business is legitimate. Not having a public liability policy can not only put your company at risk, but reduce the amount of opportunities you have for increasing your client base.

Cost of Public Liability Insurance

Most insurers will offer insurance in exchange for a monthly premium that varies depending on the type of business you run. While generally the cost will be in the neighbourhood of similar business types, an agent may wish to go over your specific operations and deduce whether that raises the level of risk. Your claim history will also affect the amount of your premium, as will the amount of your excess. Conversely, your business may present less of a risk than similar business types. In this instance, it may be wise to go over such options with a broker, as an insurance agent may not have the incentive to do so.

You can take various measures to lower your insurance costs by lowering your level of risk. For example, offering safety courses and training to employees will help reduce the odds of an accident. Installing safer equipment or other technical measures may further decrease costs, especially if they are above and beyond what is required by law. Shopping around online for quotes can also yield a better rate, as long as you confirm the insurance company is a member of the Association of British Insurers (ABI).

Where to Get a Quote for Public Liability Insurance

When searching for a quote for public liability insurance, you might think the easy thing to do is to visit the individual providers online. However, given the time and effort required to research each individual company and their roster of insurance products, a more efficient method is utilise the database of an online comparison site. These sites do all the heavy lifting for you, sorting by a variety of factors including price, customer rating, and coverage type.

What is Public Liability Insurance?

The first thing you need to determine is whether public liability insurance is even necessary. Public liability insurance protects your business from a lawsuit or claim due to a breach of negligence. As no business can predict when damages or accidents will occur, or the amount of blame apportioned to them as a a result, insurance is there to prevent a single such incident from crippling your finances and even bankrupting your business. While public liability insurance is not compulsory for all business types, you can see why many opt for the insurance anyway.

Comparison Sites

In addition to research, comparison sites also saves time by eliminating redundancy. When you visit each provider individually, you must enter your business information once per provider. Considering how lengthy the information required for public liability is, this can be quite an exhausting process. Comparison sites afford you the opportunity to enter your information just once, and even purchase a policy directly through the website.

Finding a Quote

A number comparison sites are geared specifically for aiding small and burgeoning business in the UK. They compare quotes and rate companies based on a number of different criteria. Here are some of the more popular UK comparison sites online:

  • Simply Business – One of the most celebrated comparison sites on the internet, Simply Business was ranked in the Top 100 of fastest growing tech companies in the UK for the fourth straight year. The company also won the Young Broker of the Year award at the 2011 UK Broker Awards.
  • Comparethemarket.com – Compare the Market compares and contrasts quotes from leading providers over 750 different trades. You can buy directly from the site or request advice from one of their UK based customer sales consultants.
  • Constructaquote.com – 2 minutes, 2 clicks, multiple prices is the site’s moniker, with an easy to use, five field form available right on the front page.
  • Contractorscompare.com – Everything from public liability protection to van and life insurance

Before Purchasing a Policy

It may be tempting to purchase the cheapest available offering generated by the comparison site. However, often times the cheapest insurance is cheap because it carries a number of exclusions and conditions that may leave you exposed in the event of an accident. Make sure the policy you are applying for covers you in areas that you are most at risk. If you are still unsure whether a policy is right for you, it is best to consult with a qualified insurance broker and member of the British Insurance Brokers’ Association (BIBA). A broker will help guide you through the morass of small print and help you determine whether you are fully covered for the areas you are most at risk.

You also have the option of dealing directly with the insurer. Typically an insurance company will have a number of certified brokers on staff to help you find the most appropriate policy. However, be sure to verify in advance that the insurance company is a member of the Association of British Insurers (ABI) before soliciting advice. Visit their website for more details and a list of current members.

Learn More About Public Liability For Self Employed Workers

Self employment allows business owners to attain a certain level of freedom and autonomy; yet, it requires a certain level of responsibility, as well. Self-employed people may operate their businesses from home, store front or a vehicle. Regardless of the origin of operation, self-employed people are liable for any mistakes they make on the job, as well as, for any accidents that may occur at the site where the product is sold or job is performed.

Why Should the Self-Employed Obtain Public Liability Insurance?

Most self-employed people cannot handle the expense of a major lawsuit. A major lawsuit may force a business owner to spend all of their revenue to cover the lawsuit as opposed to allocating the funds to operating expenses or others. This type of insurance protects the self employed from losing their livelihood as a result of a lawsuit.

Small businesses, in the first couple of years of business, may operate under a deficit or with a small profit margin. Because of this common occurrence for the self-employed, Public Liability Insurance is recommended. Public Liability Insurance will cover the cost of legal fees, research, expert opinions, pain and suffering and any related medical expenses.

Loss of a business will, not only, affect the self-employed person’s business credit and life, but may also affect their personal finances. This could lead to loss of personal items. Personal and business loss may be avoided with Public Liability Insurance for the self-employed.

What Should the Self Employed Consider before Obtaining Insurance?

The self-employed should first separate the business assets from personal assets. Once this is determined, Public Liability Insurance will cover the aspect of the business related to business assets. Obtaining the insurance will protect the business from bankruptcy in the event of a lawsuit. Additionally, the insurance will protect the self-employed person’s livelihood.

Business assets may include computers, laptops, company vehicles or anything that may cause an accident in the workplace. For instance, a plumber may cover his business by insuring the vehicle and also any occurrences that may occur while on site at the client’s location. An accidental burst pipe may cause water damage to floors, carpets or computer equipment. Each of these items will be covered under Public Liability Insurance if the damage occurred as a result of the self-employed employee.

Self employed people with staff may also have a need to reduce the potential for error on the job. Preventative measures may include random drug tests to ensure that the staff is performing at their best on the job. This will minimize errors that may result in lawsuits. Safe business practices will minimize the need to file claims on the insurance. This will result in higher bills.

If the company car or company truck causes damage or an accident while on company business, Public Liability Insurance will also cover this loss. Safe driving techniques and other precautions will prevent the need to file a complaint.

How to Obtain Public Liability Insurance

Inexpensive Public Liability Insurance providers are available to help the self-employed avoid costly lawsuits. The insurance may seem expensive at first glance. However, the self-employed quickly realizes the benefits if their business experiences a lawsuit with a settlement over $500,000. A reputable insurance broker can help the self-employed find insurance that will meet the needs of the business.

Lawsuit settlements may easily exceed $1 million if there are any medical expenses involved. Additionally, pain and suffering and loss of wages may also be paid through this type of insurance.

What to Expect from a Public Liability Insurer

Companies should research the company to determine the insurer’s success rate of winning cases, how fast they handle claims, what the premiums are applied to within the business and what types of claims of covered. This will ensure that the self-employed person has no surprises if a successful lawsuit is placed against the company. The agents should be informed so that the business owners can get the best deal.

Expert agents know the policies and are able to select the best options for each individual company. Self employed people simply need to interact to find the best coverage and premium prices given the employer’s business needs. Public Liability Insurance is almost a necessity for any self employed person.