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In the UK, there are around 5.7 million small and medium-sized businesses. SMEs don’t have the same resources as large firms and are less likely to recover from harmful weather and unfortunate events. Despite a lack of resources, underinsurance is common for owners of SME businesses — a survey by AXA revealed that over half of businesses are running without insurance! 75 per cent weren’t insured because their business was too small, while the other 25 per cent hadn’t considered it.
As risks come with owning a business, it is important that you are protected against potential dangers. Here, we take a look at five key reasons to insure your business and avoid out of pocket expenses.
1. To protect your property
You can’t predict the future. It really would be excellent if we could anticipate a devastating flood or fire —but we can’t. Whether you work from home or commercial premises, the correct business insurance can provide you with the peace of mind that your property and its contents are protected against unexpected damage from specific perils.
If you don’t have insurance, your business could be seriously impacted by the repair and replacement costs along with loss of income if you cannot trade whilst repairs are being carried out. Of course, this is a far from ideal situation.
2. To protect against potential legal action
It’s a legal requirement to provide a safe environment for your workers and customers. If anyone is injured or their property damaged due to your negligence, you could be presented with a huge liability claim.
If you operate a boarding kennel or cattery or run a dog walking business, you would need kennel insurance or dog groomers insurance to protect against liability claims against yourself or an employee. It could entirely damage your business and credibility in the long run by not investing in relevant insurance.
3. It may be a contractual requirement
It may invalidate the contract if you don’t take out an insurance policy to protect yourself. There are a variety of reasons this may be necessary, including:
- Contracts with clients may include a legal requirement to be insured in case things go wrong.
- If you are borrowing money to pay for equipment and outsourced material, it is highly likely that this loan will include a requirement for insurance.
- If you rent your business property from a landlord, you could need insurance for what your landlord doesn’t cover.
4. To attract and retain hardworking employees
As you own your own business, it’s only natural that you want to hire the highest skilled employees possible. And of course, as an employee, they are going to go for the businesses that offer further benefits beyond their salary.
If you want to attract highly skilled employees, you need to entice them to want to work for you. This may include a range of additional benefits, such as life and health insurance. If you don’t offer these types of insurances, you could be shooting yourself in the foot by missing out on the best employees.
5. It’s illegal not to!
Lastly and most importantly, it’s the law! As soon as you take on employees, you are legally required to have an Employer’s Liability insurance to provide cover if they suffer injury or illness as a result of working for you. Not doing so could open you up to lawsuits and a £2,500 non-compliance penalty for each day without it. Additionally, if you run a business that requires a local authority licence, it may be a requirement that Public Liability insurance has been taken out.
If you own your own business and don’t have insurance, think of the risks you’re opening yourself up to. Stay safe and get insured.
You may also like: Every Business Needs the Right Insurance Cover
Sources
https://commonslibrary.parliament.uk/research-briefings/sn06152/
https://www.telegraph.co.uk/business/risk-insights/sme-insurance/
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