According to figures published in Parliament, there were some five and a half million small and medium sized enterprises (SME) in the UK – accounting for 99% of all businesses in the country
A small to medium sized business is one employing fewer than 250 individuals, although the overwhelming majority of SMEs (96%) are so-called “micro-businesses” employing fewer than 10 individuals.
Unfortunately, the same statistics also underscore the relative vulnerability of small businesses to failure – although more than 380,000 new ones are set up each year, 250,000 fail or are otherwise wound up.
In the perilous world of the SME, probably the most secure defence against harm to the enterprise takes the form of business insurance.
What are some of the safeguards provided by business insurance?
Your business premises
- every business, including one run from your own home, operates from some kind of premises, which might be owned or leased;
- the structure and fabric of the premises need the protection of building insurance, which might be arranged by your landlord if you are leasing the space;
- but you still need to check exactly what is covered in any insurance arranged by your landlord – especially as far as your displays, shop window and any signage are concerned, since these are unlikely to be covered;
Your stock, equipment and fittings
- the contents of any business premises are likely to include all the stock in which you trade, the business equipment you use and the fittings which are part and parcel of your operations;
Professional liability insurance
- if you are in the business of providing advice and guidance to your customers because of your specialist knowledge and experience, you may be held to be professionally negligent if things go wrong or errors are made;
- professional liability insurance provides a level of indemnity that may be a requirement to practice some professions – such as the law, medicine, accountancy and architecture – or may be an essential indicator of your standing and reputation as far winning customers’ orders and contracts are concerned;
Public liability insurance
- any type of business runs the risk of public liability claims;
- if someone visiting your business premises, anyone in contact with your business activities as you are out and about, any neighbour or any member of the public is injured or has their property damaged, they may hold you liable;
- if you are found to be in breach of your general duty of care to prevent such actions, you may be ordered to pay substantial compensation;
- indeed, so substantial may such public liability claims become that it is common for public liability insurance to provide cover for up to a minimum of £1million;
Employers’ liability insurance
- if you have any employees helping to run your business, you have no option but to arrange employers’ liability insurance – it is the law;
- it is quite separate from any public liability insurance you may have arranged and the law requires you to have at least £5 million of cover – to ensure that your business is able to meet claims from employees, past or present, who may have been injured or contracted a longer-term illness through their work for you.
With so many risks and perils facing any business – large or small – it may be easy to see why business insurance is so important.