The appropriate type and level of business insurance is something that can make or break a small business. Too much, and all-important overhead costs are unnecessarily inflated; too little, and an unexpected and uninsured claim can deal a crippling blow to profitability. Getting it right, however, need not be a completely hit and miss affair; there are specialist insurance advisers dealing specifically with the needs of small businesses.

The normal risks and perils faced by any business are many and varied. For instance, the business will own property which it would be prudent to insure, otherwise any loss or damage to what it owns will need to be made good from its own funds. Equally important, however, is protection against those actions and omissions for which the business can be held liable – by clients, customers and members of the public – and thus face the need to compensate any victims.

Fortunately, there are many business insurance products on the market and enough of them to cover practically any risk. Although it might be stating the obvious, however, simply because an insurance product designed to cover a particular risk exists, it does not mean that every business will need to arrange that particular cover. An important first step for any business starting up, therefore, is a dispassionate assessment of the risks it is likely to face and evaluation of the various products on offer. Clearly, this is the stage at which the services of an independent, professional insurance adviser could well pay dividends.

Many items on the list of insurable risks will be common to almost all businesses. Some items of business insurance will be legally required; others will depend on the nature of the business, its size and the assessment of the risks involved.

An insurance need likely to be common to all businesses is the insurance covering the premises it occupies and the contents of those premises. The insurance of the building itself – against the standard risks of fire, flooding, vandalism and malicious damage, for example – will also reflect whether the premises are owned by the business, rented from a landlord or operated from the owner’s own home.

Another form of business insurance likely to be a prime consideration for almost every business is public liability insurance. Although it is not a legal requirement, many clients and customers might insist on such cover being held before agreeing to do business, since it provides protection against potentially crippling claims of liability for loss, damage, injury or death sustained by clients, customers or members of the public either on the business premises or as a result of some action or omission on the part of business activity elsewhere.

If the business has employees, it is typically legally required to hold a minimum of £5 million employers’ liability cover against claims from employees who have been injured or contracted illnesses through some fault of the business whilst at work.

Business insurance might also extend to professional indemnity insurance if the undertaking is in the business of providing services based on specialist skills or knowledge – accountants, solicitors, financial advisers, architects and surveyors, for example. Indeed, the relevant professional bodies, responsible for the recognition and registration of such professionals, are likely to insist on such insurance being in place in order for the firm or individual to be in business.

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