While it might not be top of your to-do list, having the right insurance in place could be the difference between the success and failure of your startup business. If you’re not insured and a claim seeking damages is made against you, ask whether your cash flow is sufficient for company to survive?
With the right business insurance in place, your startup can protect your buildings, contents, equipment, stock, data, revenue, employees, customers, and your reputation, leaving you free to concentrate on successfully running your business. Also, don't forget your insurance premiums are tax-deductible.
The cost of insurance for startups varies depending on what you do, and what cover you require. There is no one-size-fits-all, your business insurance should reflect your unique set of circumstances.
For a small startup business with a couple of employees, meeting your legal obligations and purchasing employers liability insurance can cost as little as £80 per year or £6.67 per month.
As an insurance broker we can assess your needs and find the insurance that matches those needs, while cost is a factor it is important to consider the value of the cover offered is just as important.
Having the right start-up insurance in place to protect your business and your cash flow is essential for startup businesses and it also demonstrates to new clients and investors that you’re serious about what you do. Likewise staff, directors and potential investors will be reassured that you have a cover in place to protect the activities of the business. In an increasingly litigious society protecting your company with insurance such as professional indemnity, has never been more important.
Having adequate protections in place promotes confidence in the business that you have the financial resources at your disposal should the worst happen.
It's common practice for counter-parties to request minimum amounts of insurance cover when negotiating contracts for goods and services.
As your business grows so will your insurance requirements. Additional covers are typically purchased along with higher coverage limits to ensure the balance sheet is adequately protected.
If you pivot into offering different services or different industries, it is vitally important that you keep your insurance broker up to date to ensure your current business insurance is suitable.
The environment in which you operate continues to change, therefore consideration should be taken to emerging risks. Every business should consider their insurance program each year to ensure you are protected from new exposures.
While Employers Liability is a legal requirement, other types of insurance are optional, however, having a business insurance package is vital to protect your business, even if you haven’t taken on your first employee and could be the difference between success and failure if the worst happens and something goes wrong in the early stages.
If your business does not have a trading history, it is prudent to offer conservative projections for your first year's revenue. Given insurers will base their premium calculations from these projections.
It's common for startup businesses to identify overly ambious revenue projections, however it is wise to stand back and consider what is reasonable with so many unknown factors that could hamper your targets.
The industry you work, the type of services you provide, annual revenue and employee numbers, alongside other individual business differences will all factor into insurers calculations for insurance premium.
The exposure to risks as a startup might appear smaller compared with large corporates, but an unfortunate accident can spell the end for a startup business. Loosing valuable assets or third parties taking seeking damages against the company can bring unmanageable costs, before the business really has a chance. If you require technology business insurance please follow the link.
These occur when a third-party demands damages from your business and takes your to court to see compensation for a loss they have suffered.
If your business suffers damage, destruction or theft of property you own, how easily can your startup replace those items that are essential to trade?
Professional indemnity insurance can help provide protection against the failure to exercise reasonable skill and care in the provision of professional or advisory services.
D&O insurance provides protection for individuals against civil, criminal and regulatory proceedings, while acting in a managerial capacity on behalf of the company. Protects the insureds personal liability for financial loss suffered by third parties.
Cyber insurance provides protection against first and third-party losses arising from security and privacy breaches.
This type of insurance is designed to protect business owners against claims that result in legal proceedings from third parties, covering injuries and/or property damage.
Employers' liability insurance is a legal requirement for all employers in the UK, it provides protection for employees if they meet with an accident or incur an illness in the course of their employment, where their employer is responsible.
Property damage insurance, can help protect your buildings and contents against loss or damage from a range of different perils. For example, fire, theft, accidental damage, storm, flood, escape of water, impact, explosion and riot.
No one wants to purchase business insurance and in the early phases of growth the additional expenditure on something you hope you will never happen can feel counterproductive. However, protecting your balance sheet and having sufficient resource to access legal support should something untoward occur, can make all the difference between a successful and failed startup.
Below are some examples of risks that startups face that can be effectively transferred with business insurance: (1) A claim for damages arising from a breach of contract from a disgruntled client. (2) Compensation claim for injury or property damage from a product you supplied. (3) An investigation and fine by a regulator that alleges your non-compliance. (4) Compensation claim for an employee that slips and falls down the stairs. (5) Property damage to your premises because of a fire, flood, theft or storm.
We recommend you discuss your individual business needs with your insurance broker to consider the availability of products to assist with protecting your company. For a reasonable cost there are insurance protections available that can provide financial and legal support when your business requires it most.
Below we talk to James McBride Wilson at 'CFC Underwriting' and Anna Husband at 'Hiscox Insurance', to obtain their perspective on the challenges they face
Thankfully, insurance is not as complicated as it may seem. So, we've put together a handy guide that will point you in the right direction when it comes to taking out a business insurance policy.