Do you need coverage for temporary staff and should you get a broker? Charlotte Simmonds answers your insurance dilemmas
1. Do you understand “the extras”?
Certain kinds of insurance are mandatory. These include employers’ liability insurance, covering claims brought by staff who suffer illness or injury as a result of their work, and professional indemnity insurance, covering losses incurred by clients as a result of mistakes or bad advice (although currently this only applies to solicitors seeking admission to their professional body).
When purchasing coverage for the first time, most small businesses tend to get these basics right, says Mark Sharman, a claims manager at Simply Business (which specialises in insurance coverage for SMEs). He says the problem is that they forget “the extras” – those non-mandatory policies that could make a big difference if something goes wrong.
“We conducted some research among our customers in 2013 and found that around 75% say insurance documents are hard to read and insurance websites hard to navigate,” says Sharman. “That means a lot of people probably don’t know much beyond the basics.”
One example of this, says Sharman, is “business interruption insurance” – also known as business continuity insurance. This covers a business’ losses if it unexpectedly has to stop trading for a long period of time, such as if equipment is stolen or premises are damaged.
Kevin Pratt, an insurance expert for the financial products comparison website MoneySuperMarket, agrees that there are less familiar types of insurance to consider. He cites “key person insurance” and “income protection insurance” as two examples. “The former would pay out if an important member of your team was off ill or seriously injured for a lengthy period of time, and your business lost money or had to recruit a replacement. Income protection insurance will cover a sole trader if they become sick or injured and cannot work. These are both important for small businesses because people (yourself included) are such a valuable asset.”
2. Do you need coverage for temporary staff?
Employers are legally responsible for the safety of their staff, and the Employers’ Liability (Compulsory Insurance) Act 1969 requires they have coverage of at least £5m. But do you fully understand who might be classed as an employee? It’s not just full-time staff but freelancers, contractors, apprentices, volunteers or interns may require coverage too, says Sharman.
“Say you’re a builder and you bring in contractors for extra support on a job,” he explains. “Does your employers’ liability insurance need to extend to them? The answer to this question doesn’t depend on the amount of time they work for you, it’s about the nature of the relationship. What amount of control do you have over what they do? What are the terms and conditions of their contract? It may be that you need to cover them even for a few days’ work. HSE [Health and Safety Executive, an independent watchdog] has good guidelines about who needs to be classed as an employee.”
3. What coverage is your landlord providing, and do you need more?
If your business is based in a premises (such as an office or shop), then you should have insurance to cover your equipment and/or stock, as well as public liability insurance – which covers any injury to a member of the public.
With so many small businesses based in a co-working space or serviced office buildings, it is critical to understand what type of coverage is and is not provided by your landlord, otherwise you risk either not having enough coverage or – on the flip side – paying for coverage twice.
Pratt spent 20 years running his own company before joining MoneySuperMarket, and describes his experience: “When I rented, the landlord had insurance for common areas in the building and the stairwell, but anything I took into my office – such as computers – I had to insure myself.
“If you are renting, talk to the landlord and understand to what extent they cover,” he advises. “If the coverage stops at your front door, then you need to get your own. Likewise make sure that you’re not paying for certain types of insurance twice, because you might be covered for things like public liability under your landlord’s policy.”
4. Should you ditch the DIY approach and get a broker?
Entrepreneur James Morris is the founder and managing director of Trafalgar and JF Marquees, which delivers high profile marquee events in London and the south of England.
It all began in 2007 when Morris wanted to see if he could turn his student overdraft into a business. He drew up a budget on the back of a beer mat and bought his first marquee. From the outset, Morris understood that insurance would form the bulk of his budget and that getting the right coverage was going to be critical. He says trying to become an insurance expert yourself is a waste of time; instead, invest in finding the right broker.
“When you are growing you’ve got to work out what your time is worth, and where it’s best spent,” he says. “Why would I spend hours researching policies myself? It’s not worth trying to save a quid here and there because ultimately when something goes wrong I want to know I’ve got an expert who has handled it.”
However Sharman says: “Nowadays online brokers can generate dozens of quotes from dozens of insurers in minutes, so there’s no reason you can’t take a DIY approach. Our platform at Simply Business is built exclusively for small businesses and we specialise here, so chances we’ll be able to cover you even if your needs are niche”.
5. Are you factoring in growth?
Morris has been working with the same broker since he started out, and says it’s important to find an individual or a company that isn’t too niche. He advises looking for specialism but also broad knowledge and expertise, because (all going to plan) your business is likely to grow.
“If you are small you’ve got to be a giant-killer; you want to punch above your weight,” he says. “We therefore needed a broker who understood the whole events industry, not just marquees. I wanted to work with someone whose brain I could scan for tips and tricks.”
Sharman of Simply Business agrees that you should be “thinking about the future” when creating an insurance plan. “Consider how much work you are likely to be taking on in six months or a year’s time – this could impact on the amount of employer’s liability or public liability insurance you need. If you plan ahead then you save the hassle of having to play catch-up with your policy.”
Marquees are fabulous for all occasions especially winter marquees and wedding marquees as you can choose from Marquee Hire large selection. Winter marquee hire is a great option in cold weather as you can have heating to warm up the occasion.
