Understanding Business Insurance
While it might not be illegal in all cases, not having business insurance can expose your company to significant risks and potential legal troubles. Financial Loss is a primary reason for having business insurance. Without insurance, you could be personally liable for any losses incurred by your business.
In some cases, you might be legally required to purchase insurance. The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance. Protections from a limited liability company only go so far.
During your search, you may question if companies face penalties without insurance. The answer is yes, and punishments differ by state. Product liability insurance protects retailers from losses caused by defective products.
Business insurance protects you from financial losses due to lawsuits, claims, disasters, accidents or fires during operations. It covers you partially or fully for costs and damage. Sometimes it’s called commercial insurance. Both refer to several types of policies, not one specific policy.
The Risks of Not Having Liability Insurance
Operating without the necessary insurance coverage can lead to legal problems. If someone is injured on your business premises, and you don’t have liability insurance, you could be sued for medical expenses and damages.
Types of Business Insurance to Consider
- General Liability Insurance
- Employers Liability Insurance
- Public Liability Insurance
- Professional Indemnity Insurance
- Fidelity Coverage
General liability insurance protects your business from claims related to bodily injury, property damage, or personal injury. It can help to guard against specific kinds of liability suits such as third party bodily injury, third party property damage, or advertising injury.
Employers Liability Insurance is a critical component, offering a layer of security and compliance with the law.
Fidelity coverage, also known as a fidelity bond, will protect a business owner against acts like theft or fraud by an employee.
Public Liability Insurance financially shields you should someone take legal action against you for property damage or injury.
Professional Indemnity Insurance: What You Need to Know
What happens if you don’t have professional indemnity insurance (PI insurance)? If you do not have PI insurance, you are at risk of having to pay any costs relating to a claim made against you by a client or third party, which can include legal fees and compensation.
How much PI insurance do you need?
- You can usually choose between £50,000 and £5 million of cover.
- Your regulator, professional body or client contracts may determine the minimum amount you need.
For how long do you need PI insurance?
- You must have run-off cover for at least 6 years as claims can be made years after the professional services were delivered.
Who needs PI cover?
- This insurance is invaluable for those who provide professional services or advice and could be requested by clients for contract work.
If you provide a professional service, you need professional indemnity insurance. It protects you from claims by clients who suffer financial losses due to your advice or services. It’s advisable if you offer professional advice or services for peace of mind against potential claims.