By Qdos, in partnership with Caroola

Running your own business can seem like a 24/7 operation. From managing cash flow to marketing, you can find yourself questioning where the time will come from to do your actual work.

And then someone mentions insurance…

But while it may not be a legal requirement, there are few things which protect your business as strongly as the correct policy cover.

Why does business insurance matter?

Business insurance might not seem like the sexiest or most compelling job, but choosing the right business insurance is essential if you want to protect your company and yourself. If something unforeseen goes wrong, it is insurance which can be the difference between staying in business or not.

From property damage, legal costs, and injuries to compensation claims, the unexpected can be found around every corner. Purchasing the right insurances, those which are relevant to what you do and the risks you incur, is therefore a vital part of taking your first steps as a business owner.

It should also be noted that some business insurance policies are mandatory or may well be required by clients or regulatory bodies. Employers’ liability insurance is the most notable of these. It can be a legal requirement for businesses which employ staff.

Why types of business insurance are available?

There are a host of business insurance policies available, looking to cover you in any event. The most common and regularly required are professional indemnity, public liability, and employers’ liability insurance.

Some clients will require you to have professional indemnity and/or public liability insurance before they will enter into a contract with you.

Here’s a quick look at what each of these policies cover you for:

• Professional indemnity (PI): Everyone makes mistakes and that’s where professional indemnity insurance comes in. If a client claims your negligence or an error you have made has cost them money, then they may look to take action against you. PI insurance covers the legal cost of defending your case and, should you lose, any compensation that is owed.

• Public liability: Accidents are best avoided, but as the saying goes ‘they happen’. Public liability insurance protects your business if another person is injured or property is damaged while you are carrying out work. It covers any costs of defending a claim, as well as any damages you are legally liable for.

• Employers’ liability: If you have staff, and they suffer injury, illness or even accidental death as a result of their employment with you, then you are likely to end up facing a legal claim. Employers’ liability insurance protects you against any claim of this nature.

As well as these common types of business insurance, there are several other policies which you may want to consider. For example, legal protection insurance can provide free legal advice, cover solicitors’ fees, help you if you have a dispute with HMRC and even cover your costs if you get called up for jury service.

Other types of insurance include tax liability cover, income protection, and personal accident insurance.

Which insurance cover is right for your business?

With so many different types of insurance out there, it is important to understand which policies are relevant to your business.

For example, as a sole trader you may not need employers’ liability insurance as you probably won’t be employing anyone, while if you work from home you might require PI insurance but potentially not public liability cover – unless you have clients coming to your premises who could suffer an injury while visiting you.

The important thing is to make sure the insurance you have caters for the services or products your business supplies. To get this right you need to think carefully about the type of work you do and the risks you need to cover. For example, could you face a compensation claim from an unhappy client? Or is there a chance a member of the public could be injured because of your business activities.

Which can happen if you’re not covered?

As mentioned, with the exception of employers’ liability insurance if you have employees, you aren’t legally required to take out business insurance. But the consequences of not having it can be severe and can manifest themselves in several ways:

• Loss of income: Whether you suffer an accident, injury or lose equipment, if you can’t work then you can’t earn money. Business insurance will also protect you from any costs you may incur as the result of an unexpected event, whether that be claims for injuries at work, lost, stolen or damaged equipment, or office repairs due to flooding or fire. You will also be protected if those natural disasters mean you can’t continue working; for example, if you lose all your equipment in a fire.

• Legal fees: Whatever the reason, if a claim is brought against you, things can get expensive quickly. Without insurance, you could be facing very large legal costs. Even if you win, you could still face having to cover these fees.

• Fines: Breach the law around employers’ liability insurance and you risk facing large fines. You can be fined £2,500 every day if you are not properly insured, and a further £1,000 for not making your employers’ liability insurance certificate available.

The bottom line is that insurance isn’t an expense to be avoided, it is the safety net which could keep your business viable. Furthermore, as a sole trader you can be responsible for any expenses incurred by your company, so without insurance you could be facing having your home repossessed or bankruptcy if you rack up legal bills or face a compensation claim.

Without insurance, a single unexpected event could leave you with serious costs or legal exposure.

How can Qdos business insurance help you?

Qdos works with more than 100,000 contractors, freelancers, and engagers to provide them with business insurance that gives them the peace of mind to get on with their day job. The over-arching aim is to help you to really understand what you’re protected for and make sure you get the right cover for your business.

A member of the dedicated team will be on hand to support you with all your insurance needs and guide you through the process to ensure that if those nasty surprises do happen, we’ve got your back.

They have a wide range of policies and are experts in all things IR35, meaning that when it comes to constructing an insurance policy, they have the expertise and knowledge to protect your business. Book a call with Qdos or get a quote through MyMarketplace.