For many existing and start-up SME’s (Small/Medium Sized Enterprises) arranging business insurance may not be at the top of the ‘to do lists’ for start-ups. However adequate and appropriate insurance is essential for a variety of reasons, e.g.

  • Legal and/or regulatory requirements
  • Insurance needs to be appropriate for the business
  • One uninsured or underinsured claim could wipe out a business
  • Even with strong risk protection unexpected incidents can arise, including events that were not considered to be significant risks. Claims can arise from a variety of different scenarios ranging from negligence on the business’ behalf, property/bodily damages to a third party, internal claims from an employee due to being treated unfairly etc. The list is endless.

Even if you have business insurance is it appropriate and adequate?

business insuranceMany SME’s may not have the relevant knowledge to ensure that their coverage is fit for purpose. Purchasing a non-advised business insurance product could potentially leave the buyer unable to make a claim.

Therefore, sourcing sufficient cover for a business is extremely important, as ‘one size fits all’ policies may not be suitable for all SME’s.

Why you should use an experienced business insurance broker

Insurance is complex: As the claims culture of modern day life is continuously on the rise, even the smallest of businesses may be exposed to a range of risks and therefore navigating your way through different business insurance markets can often be time consuming and potentially complex. This is where an experienced insurance broker comes in.

Knowledge and contacts: An experienced brokerage will have the knowledge and contacts to ensure that clients are offered applicable coverage to meet their business insurance needs and also any potential governing body/contractual/legal requirements.

Highly regarded independent brokerages will have relationships with a number of business insurance providers and will utilise their relationships to ensure that sufficient coverage is secured, at the best price and with their clients’ best interests at the forefront, leaving clients to concentrate on their business.

business insuranceBrokers are also there for any queries that clients may have during the policy period. For example, clients may be asked to increase their current level of cover when tendering for a new contract. A good broker will ensure that cover is obtained within the required deadline, at the best price and also ensuring that it complies with the contract provisions. This can be of great help towards winning the contract and expanding the client’s revenues.

Risks of using a less experienced broker. In this situation, they may not provide business insurance with adequate cover. Although a business might be saving money in the short term, they could end up paying much more further down the line.

A case study on how a start up business can benefit from using an experienced brokerage:

Tom is an architect who has just started his own business. He is a member of a regulatory body, has his own office and employs two members of admin staff.

Tom believes that as he is just starting out and only working on small scale projects, he does not need to bother with business insurance at this time as it is an unnecessary cost given the small nature of his business.

However, over the course of a few weeks, Tom is faced with the following scenarios:

  1. He receives a letter from his regulatory body asking for proof of his Professional Indemnity Insurance.
  2. He received a letter explaining that as he doesn’t hold Employers’ Liability cover and indeed employs staff, he is facing fines of up to £2,500 per day.
  3. A client who had visited a couple of weeks ago and tripped at his office due to unstable flooring has now decided to sue Tom to recover the costs of him being off of work for a period of time
  4. Tom receives a phone call from his bank to confirm some criminal activity. They advised that his account has been compromised and cyber thieves have stolen £25,000.

Had Tom have used an experienced brokerage, an adequate Professional Indemnity Insurance policy would have been put into place to cover the requirement of the regulatory body as well as to protect him from claims from possible negligent acts, errors or omissions within his work.

The broker would have ensured that both Public Liability and Employers Liability Insurance were recommended to Tom, as it is a legal requirement for him to hold these, should there be a claim arising out of any injury suffered by a client at Tom’s place of work.

Finally, a suitable Cyber Liability Insurance policy should also have been mentioned, as this would have helped with the crime aspect of Tom’s money being stolen.

Without suitable coverage in place, Tom is not only potentially faced with having to pay very costly fines/compensation/legal and defence costs but it is also very likely that Tom will be unable to continue trading and this is all because he assumed that Insurance would not be applicable to his ‘Small Business’.

Note the Insurance products advised within the above scenario are a non-exhaustive list of the wide-range of products that are available to SME’s and new businesses.

Having a range of products not only provides broader coverage, but could really benefit a business in the event that they need advice from a solicitor, regarding contracts/collateral warranties, specific legal advice etc. which some policies include at no additional fee. This in itself could be an invaluable feature, especially to new start-ups and SME’s.

If you need help with your insurance requirements we would be pleased to hear from you

PIASo, why not  contact a brokerage with over 30 years of experience and holding a very good presence within the London market, who are also regulated and authorised by the Financial Conduct Authority. Just contact the friendly and experienced team at Professional Insurance Agents Ltd, who will happily speak with you about any of your business insurance needs from this link >>>