For a start-up business, keeping a tight control of costs is crucial. Taking out the right insurance cover is vital in order to be able to trade, but it is essential to seek independent advice from a reliable insurance expert to keep premiums as low as possible.
If you currently use an insurance broker, check that they are providing truly independent advice and that they are not tied to any insurers as this may mean you aren’t getting the best possible deals. Consider asking another broker to carry out a comparative review. If you do, ensure that both brokers are quoting on the same basis to ensure a direct comparison. Avoid going to a number of brokers as, paradoxically, this can work against you.
As a start-up company, there are certain covers that you will need to have in place before you can legally start trading. If you have employees, you need to take out Employers’ Liability insurance. This is a cover that protects your business if an employee has an accident whilst carrying out his duties. As you employ more people, the ability to demonstrate a robust health and safety plan can have a positive effect on your liability premiums.
Another important consideration is Business Interruption cover, which protects you from the consequential loss of income following, for example, a fire or perhaps a flood. Most businesses fail after a serious incident, not because of the physical damage caused but because of inadequate business interruption cover.
UK insurers experienced major losses due to floods in 2012. This allied to poor investment returns and a period of major global disasters means it is likely premiums will rise in 2013. As a result, it is important to ensure that you are choosing the right insurance covers for the lowest possible cost. In order to keep your premiums low, consider with your broker risk management measures and how they may affect premiums. For example, an upgrade in your alarm system may result in premium savings. Alternatively, if you run a vehicle fleet, you could consider driver training and a host of other risk management measures.
A competitive insurance market has led in many cases to historically low premiums. There is a strong argument that we have reached rock bottom in that sense, and that premiums are certain to rise in have a major reliance on a key individual, without whom your business would suffer significant financial losses. A simple and inexpensive personal accident policy will provide invaluable funds in the event of an accident to that individual.
You will need Public Liability cover to protect your business from claims made by third parties for any personal injury or damage caused to their property. With so many personal injury claims companies operating today, it is vital that you take out this cover to protect your business from the possibility of suffering severe financial losses.
Should you be operating in the service sector – providing advice for a fee – Professional Indemnity insurance should also be a cover that you factor into discussions with your broker. This protects your business if you provide advice or a service that leads to a financial loss for a client.
It is relatively easy to identify your assets and you will need to ensure the sums insured reflect realistic replacement or rebuilding costs. Sometimes, however, it is more difficult to identify your potential liabilities and here your broker will help you. It is easy to forget that your most important assets are your people. You may the next 12 months.
If a thorough review of your insurances results in premium savings, you might want to consider a Long Term Agreement or even a long term policy, if available, to tie your insurer in to the premium level for longer than the usual 12 months.
Ultimately, talking to an independent broker should ensure you have the best possible cover for the most competitive price. Their advice on what insurance protection your start-up needs – and steps you can take to keep premiums low – will be invaluable, saving you precious time and needlessly wasted cash when you need it the most.
Finally, don’t forget that as your business evolves, your insurance requirements will evolve. Keep your cover under review to ensure you’re adequately insured, avoiding any nasty surprises in the event of an unforeseen situation arising.
Words by Paul Gardner, Sales and Marketing Director at Prescott Jones Insurance Brokers