Commercial property insurance offers protection for property that is owned to generate an income as an investment should it be damaged by fire, storm, flood or theft.
Commercial property insurance is available as buildings and/ or contents cover. Buildings cover protects the physical structure of the building while contents cover includes cover for your fixtures and fittings as well as stock and sometimes money cover. If you are a tenant of a commercial property, you would need to have your own commercial contents insurance.
Commercial property insurance may also include protection for loss of rent or business interruption cover following an insured event. Business interruption cover offers financial protection while your business is unable to trade due to the insured event.
Public liability insurance
Public liability insurance offers you financial protection should the operation of your business or you carrying out your profession cause a third party injury or property damage.
Public liability insurance will cover costs associated with your defence and/ or any award of compensation to the third party.
Product liability insurance
Product liability insurance offers you protection should any product or item you supply, service, repair, or manufacture cause another person injury or property damage.
Product liability insurance will cover any award made to the third party as well as any costs associated with their claim.
Employers liability insurance
Employers liability insurance will offer your business protection in the event that an employee of your business is injured or becomes ill as a result of their work for your business.
If you are found to be liable for their injury or found to be in breach of your obligations under Health and Safety legislation, employers liability insurance will cover any award made to your employee.
If you have more than two vehicles, commercial motor fleet insurance offers your business protection should one of them be involved in an accident.
Keyperson insurance is a form of business life insurance that offers protection should a keyperson die.
A keyperson can be a director, an employee or even the business owner. Anyone whose unique skills, knowledge or experience would be very difficult to replace should they die.
Professional indemnity insurance offers you protection if your profession involves giving advice or a professional service and your error, breach or omission causes a third party a financial loss.
Professional indemnity insurance is required for registration in a number of professions.
If you have an accident and are ill, injured, or disabled then personal accident insurance will offer you financial protection while you are unable to work.
Personal accident insurance may also include a lump sum payment should you die due to an accident.
Factors that affect the cost of business insurance
There are many variables that affect the amount you will pay for business insurance, as well as the types of business insurance that are important for your business. Your business may not need all of the types of business insurance outlined here.
All businesses are subject to different risks, and the financial consequences of an event occurring depend on a number of factors such as the size and nature of your business.
The nature of your business will determine the types of risks and likelihood of an insured event occurring. This will affect the premium you pay for business insurance.
If you are a sole trader, working on a laptop in an office you will probably present less of a risk to an insurance company than, for example, a large food or beverage business with kitchens and a high footfall. In the first example, you may need professional indemnity insurance, in the second you may need public liability, employers liability, product liability, insurance in case of fire and business interruption cover to name a few.
Some industries are considered inherently more risky than others eg. construction.
Business insurance is often sold to small and medium businesses by sector with relevant types of protection for that type of business.
The amount of business you generate will affect the potential risk you present to an insurer as well as the number of employees working for your business, the type of premises you operate from and its footfall.
If you run a large warehousing or distribution business, for example, then product liability insurance will be important to your business and your premium will be higher than a small retail outlet.
If your business has a high turnover, then business interruption cover will cost more if you are unable to generate an income due to an insured event.
Like all other forms of insurance, if you have made previous claims then you will pay a higher premium for insurance in the future.
If you have made a claim on your business insurance, you will be perceived as higher risk by an insurer for a number of years. However, if you have a long history of being claims free this may mean a lower premium for business insurance.
If you wish to insure your business and it is located in a premises then the location of that premises will affect the premium you pay for business insurance.
If the location is prone to flooding, for example, you will pay a higher premium for insurance or you may face exclusions in cover. The type of tenant in a commercial property will also affect the premium for commercial property insurance, depending on the risk they are perceived by an insurer to present.
The security and fire safety measures in your premises will also affect the premium you pay for business insurance.
Yes. Do not assume that operating a business is covered by your home insurance as it most likely is not.
You may also need specific types of business insurance such as public liability, professional indemnity, and employers liability depending on the nature of your business and whether or not you have employees.
If you drive a car or van for commercial purposes, you would need to inform your motor insurance company or consider van insurance if you drive a van.
There are many forms of business insurance that may be relevant to your business, depending on what you do such as public liability, product liability, commercial property or business interruption cover.
Also, as a sole trader, you would be well advised to consider life insurance or keyperson insurance as well as income protection insurance or personal accident insurance as your business may rely solely on your knowledge or skills and you or your dependents would need protection should you die or be unable to work.
If you drive a car or commercial vehicle you are legally obliged to have commercial motor insurance or van insurance.
Otherwise there is no legal obligation to have business insurance. However, you have a duty of care to your customers, clients, suppliers and anyone you have a commercial relationship with and should consider having relevant forms of business insurance.
Registration with some professional organisations may require you to have professional indemnity insurance.
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