Business owners in the UK have recently seen positive changes in insurance law – notably, the introduction of the ‘Enterprise Act’, which acts upon the resolution of ‘late payment’ disputes by obligating insurance companies to settle sinister payments within ‘reasonable time’. But for this to happen, the business has to be properly insured in the first place, which leads us to the question: What are the insurance basics for business owners in the UK?
To begin with, there are two types of business insurance:
- Required by law
To say that insurance required by law is basic would be a redundancy, but as it happens, there particular cases in which businesses can be exempt from this type of insurance.
Business Insurance Required by Law
Under UK law, it is required that business owners have employer’s liability insurance, which is used to cover the compensation costs for injured or ill employees (including seasonal, temporary and casual employees). Failing to comply with this requirement may end up in fines for the business owner, in cases up to £2,500 per day. Only two types of businesses can be exempt from having employer’s liability insurance:
- Those companies that do not have employees
- Family businesses that employ family members
In addition, the businesses which use vehicles as part of their operations are bound to have commercial motor insurance; in such cases, the basic required by law is third-party insurance.
What if I am self-employed?
The basic legal obligation for the independent, self-employed workers is to pay for National Insurance, but are only required to do so if they’re making profit of £5,965 (or more) per year.
Beyond the types of insurance required by law, there’s a vast range of insurance products that can be purchased by business owners who wish to protect themselves against the equally vast range of potential, dreadful future scenarios.
Common types of insurance in this category include Commercial Property Insurance, and Liability Insurance. Commercial Property Insurance usually covers common reparations and the replacement of stock and equipment. This type of insurance tends to protect property and equipment from everything (fire, theft, etc), but not from acts of war and terrorism, and from the normal, expected wear and tear of property, stocks and equipment.
To conclude, there is Liability insurance, a popular product amongst manufacturers, product designers and professionals. It offers protection against faults, negligence, personal injury, and loss of (or damage to) property.
Business owners should always check their insurance policy from time to time – either to update the coverage or revise the terms specified in the contract. It is highly recommended to seek legal counsel for complex or unique business operations. For more information on insurance you can reach the Association of British Insurers.