How to Protect Your Business in Three Important Steps

Running a business is not always easy and there are many pitfalls to be avoided along the way to make sure your business runs smoothly and doesn’t get into legal trouble which it then can’t get itself out of. There are however three basic steps to take to protect your business from misfortune and these are about investing in three different types of insurance.

If a business gives bad advice or makes a mistake it is likely that their clients could lose money and as a result may claim damages against the company. Professional indemnity insurance protects the company in these circumstances. It is wise to have PI Insurance to protect the company from paying out expensive legal and compensation fees.

To know whether you need professional indemnity insurance you need to decide whether you offer a service that could be damaging to a client. You may need it if you work in the following professions;

• Legal
• Medical
• Healthcare
• Consultancy
• Architecture
• Finance
• IT

If you work in any of these trades- and the list is by no means exhaustive- there is the chance that any professional advice that is incorrect or taken in the wrong way could mean that your client makes a claim against you. The same applies if you make errors that cause your client to lose money. They could easily hold you accountable for loss of earnings/disruption to business.

By getting PI, you are protecting your company from the financial implications should any such errors occur. It could also be a wise move, not only to get PI for the life span of your business but also for when it stops trading too. This is called run off cover and protects you for any work carried out in the past as there is always a chance that claims against the company can be made months or even years later. If your business is no longer operating then your PI will have expired. Without run-off cover you will not be protected against any claims made against you.

A business has a duty of care to safeguard the safety and security of any members of the public they interact with. Most businesses have to interact with public either on their own premises or that of the public. If any damage occurs to a member of the public’s property or if their wellbeing is affected by the actions of the business then a claim can be made against the company.

The following areas of businesses are likely to need Public liability insurance;

• Retail
• Hospitality
• Trade

You will need public liability insurance  if during the course of your work;

• You visit other people’s property
• People visit your business premises
• A client asks you to have this in order for them to work with you
• The nature of your work could put people at risk of injury

These days, even minor incidents and a small injuries or damage to properties can result in huge claims being made against a business. Be wise and protect yourself should any such incidents arise.

Whether you are a small start-up business or a huge corporate empire you need, by law, to have employers liability insurance. This is to protect you from any claims made by current or former employees stating they have become ill or injured as a result of the work they have done for you.

If you do not have employer’s liability insurance then you are breaking the law and could be fined up to £2500 for each day that you do not have the insurance. One of the exceptions here is if you only employ family members then you are not required to have the insurance.

Worryingly a study by YOUR insurance revealed that 47% of the businesses surveyed did not know that it was illegal not to have it.

According to the Health and Safety Executive there are a few types of organisations that do not need to have it. Some of these include:

• Health Trusts and authorities
• Government departments and agencies
• Police authorities
• Passenger transport executives and magistrates’ courts committees

So unless you know for sure you are exempt then make sure you have this insurance, not only to protect your business and employees but to make sure you are on the right side of the law.

Claims can be made against your business if you make a professional error. They can also be made if an employee gets ill or injured from carrying out their work activities for you or a member of the public complains they have been injured, or their property has been damaged, as a result of your business. It is therefore a sensible option, in order to protect business, to invest in those three different types of insurance and help safeguard the future of your company.