How to Insure Your Small Business Without Breaking the Law or the Bank

Life isn’t easy for small businesses, but if you want your business to succeed, you have to stay on the right side of the law and that means complying with costly insurance legislation.

Stay legal

Very often, when planning a new company, insurance is the last thing you think about. But, once you’re up and running, it’s something you can’t avoid. Despite the pressures involved in getting a new business off the ground, if you ignore your legal responsibilities, you could find yourself in real trouble. Yet, many small business owners and part-time entrepreneurs still fail to take out insurance despite the legal consequences.

However, the unfortunate reality is that the legal implications of business insurance apply just as stringently to small SMEs as they do to large multinational corporations. Fail to comply and you will be penalised, which could lead to the downfall of your company and even the repossession of your personal assets.

Look on the bright side

One way of dealing with your insurance obligation is to view them as a business asset. Regardless of the legal implications and the cost, the right insurance package could be a lifesaver for your business. After all, what would you do if your business were affected by fire, a major theft or even accidental damage? In business, anything can happen and usually does. Insurance is there to protect you if it does.

Review your insurance needs

Business insurance exists to protect all parties involved within a business. Your first step should be find out exactly what insurance you are required to have by law and what insurance your business could benefit from. Legally, insurance regulations can vary from region to region, so a good place to start might be your local small business centre. The Department for Business, Innovation and Skills should be able to point you in the right direction too.

One thing is certain, if you employ staff, you’re legally obliged to have employer liability insurance. In certain cases, you’ll need public liability cover too. Furthermore, if you’re a sole trader with a need for expensive specialised equipment you might want to include cover for theft, loss or damage of that equipment.

Cut costs, not corners

Once you’ve ascertained the cover that you need, you next stop will be to look at ways to keep your insurance costs down. Insurance premiums may have risen steeply in recent years, yet there are a few ways in which you can cut costs and still stay within the confines of the law.

• Look at the company’s activities. Are there certain activities that contribute to your insurance costs that you can do without? Anything that costs the business more than it brings in should go in the short term.

• Examine best practice in health and safety. Taking advice in respect of a health and safety audit, for example, could cut your costs even further.

• Review security. Is your business property alarmed properly? What could you do to improve security that would be reflected in your insurance quote?

• Compare quotes from different insurers, but don’t forget to take in the small print. Excess could make a huge difference to the value of your policy.

Look at all of these aspects and you’ll be able to give yourself two choices when it comes to your insurance bill. You could choose a lower level of cover, effectively cutting your premiums. Or, you could be able to afford a higher level of cover, which would offer your business better levels of protection. The choice is yours.