Some might believe that insurance is only for large businesses but this is a huge misconception. While your small business is under a lot of pressure and threat, that little added safety blanket can take some of that pressure off and allow you to channel this all into your work to smash yet another business year and bring you a step closer to growing your business.

Why Do You Need Business Insurance?

There is a range of insurance options small businesses can go for, and which ones you would prioritise would depend on your business type. While some business insurance is a legal obligation, for example, an employer’s liability. Many others are optional to keep some things off your mind like clients not paying their invoices on time.

As a minimum, many businesses, SMEs and LSEs need public liability insurance and professional indemnity insurance. Here, we will answer the question and delve into what key insurance policies you should consider as a small business heading into this new business year.

Product Liability Insurance

This covers any harm or damage brought on by the goods you sell, as the name suggests. For instance, you might be held liable if one of the electric lamps you sell shocks someone with electricity when used regularly. 

You might even be required to cover the costs of defending yourself against a claim of this kind even if the product was used improperly and it wasn’t your fault. And that might cost a lot of rivalry and substitute for the Starlink system, which has been instrumental in thwarting Russia’s incursion into Ukraine. Competition is often the most effective force behind price and performance in space, as it is everywhere else.

Property Business Insurance

If you have expanded or started a physical store, and have either invested in property or are renting, then you might be considering whether to insure the property, although in some cases, if you are renting from a landlord or paying a mortgage broker, then the property might already be covered by property insurance for things like damage.

However, in these cases, it is always safer to read the small print and find out exactly what you are covered for or find a policy that covers everything because, when it comes down to it, the store is your income so you need to be protected at all costs.

Credit Insurance

This might be a good choice for those businesses that are involved with manufacturing, supply chain, e-commerce, construction and so on. Credit insurance provides security against customers not paying their invoices on time and therefore protects your cash flow monthly. Credit insurance is very useful in the sense that it allows your company to grow and takes the time away from constantly chasing accounts to pay on time.

Business Interruption Insurance

In the event of a disaster or if your business is located in an area prone to floods, wildfires or perhaps you’ve been hacked, you are covered drama-free with business interruption insurance. While this policy might not be a sought-after one for all businesses, it’s always good to know in case of expansion, as risks grow with it.

Tax Investigation Insurance

Tax investigation insurance covers a range of professional costs if you need to defend against HMRC. An investigation might happen because you might operate in a high-risk industry or because of any bookkeeping error. There are several reasons why this could happen but as long as you stick to best practices, you shouldn’t have to worry and all the costs will be covered.

Key Person Insurance

If a key person, whether that be one of your partners, a director or a vital member of staff, is unable to work due to extreme circumstances, for example, death or illness, there is an obligation to protect the business from any extreme structural change.

If you are a small business, a lot of the staff seem vital, so picking which individuals to cover is a task but necessary. You wouldn’t usually need more than £100,000 to cover these changes but this could be calculated by the insurance provided based on your estimated turnover.

Key person insurance essentially protects you from any disruptions in cash flow and can benefit several businesses, small, medium and large; therefore, if your company is strongly reliant on a few members of staff, this would be one to seriously consider.

Read: Where To Start When Considering Investing In Property

Public Liability Insurance

If you have a physical store or service where you are face-to-face with your customers, then this might be one for you to consider. It can cover you in case there is ever an accident to a customer on company property. It can additionally cover damage to others or neighbouring properties.

Public liability insurance isn’t a legal requirement but should be something businesses who are in contact with customers should consider.

Final Thoughts

Remember, your business might be small now, but your dreams are big. Don’t underestimate the power of protection. Invest in the right insurance policies – from public liability to key person protection – and focus on what truly matters: smashing your goals and building your empire.

This isn’t just about ticking legal boxes; it’s about peace of mind and safeguarding your hard work. Think of it as the safety net that lets you take calculated risks and scale your business with confidence. So, ditch the misconceptions, explore your insurance options, and secure your journey to entrepreneurial success!

Author’s Bio:

Daisy Moss navigates the financial landscape, empowering businesses to grow fearlessly. As a credit insurance broker, she shields clients from customer defaults, ensuring smooth journeys on the path to success.