If you’ve heard it once, you’ve heard it a thousand times: if you’re starting a business you’re going to need insurance, right? But what does that mean? What kind of insurance do you need and how do you determine your coverage and needs? This is a topic in many of your minds as you start out and also if you are a FIPI member who is now on the search for the right Insurance policy.
Taking out insurance is a bit like buying an umbrella on a sunny day, it’s not yet raining but you are protecting yourself against the shower that might never come! It gives you peace of mind, comfort and in many cases is a necessity if working with a third party. For example if you are running an event in a hotel or with a retailer, what happens if something happens to one of your clients while on their property? Well, put simply you need your own insurance to fully cover you.
Today, I want to focus on the most common, which is called Public Liability Insurance. This can be described as Insurance that protects you against anything happening to your clients or their property while they are on your watch. If others person or property are injured or damaged as a result of your activities the law may find you responsible and you may find yourself having to compensate the injured third parties for your actions. I will give you a simple (non fashion!) example –
Customer slips on oil and sues garage
A client enters a garage and slips on some spilt oil, breaking their leg. As a mechanic has not cleaned up the oil or put a sign out warning clients to be cautious, the client pursued the mechanic for compensation and was awards damages. Let’s relate it now to our industry. You are running a consultation or class in your home or in a hotel conference room, a client of yours falls over some boxes you left in the way or also possible, afterwards your client believes the information you gave them was incorrect or damaging to them in some way. In either instance, Public Liability Insurance is a must.
Now, let’s be positive. Neither of the above are likely. However, consider this small price for yours and your clients peace of mind.
What kind of coverage do you need?
The amount of coverage you need depends on the nature of your work and the perceived risk associated with it. For example, a building contractor will need more coverage than a style consultant. Where you work, in your own home, in your clients home, on a retail premises are also an important factor in getting the right cover. The best course is to phone as many companies as you can and speak to as many people as you can in order to get the right cover for you. Each insurer will ask you a number of key questions in order to evaluate the cover you need. This is perfectly normal. You must be honest about your business activities to ensure you are covered for what you need. In fact if the company doesn’t ask a certain question the obligation is on you to proved all material facts, so if an insurer deems a fact to be material then it is, it may affect the cover you can claim.
Also, policy covers have limits on amounts that insurers pay out – so you need ensure you choose an adequate limit of indemnity. Typical limits would be €1 million up to €6,500,000 but you can get cover for much lower amounts.
Remember, you can also increase your cover down the road as your business and services grow.
We recommend as a starting point to check out www.simplybusiness.co.uk which has a handy starter form to show you the types of questions an insurer will ask. Fill in this simple form and it will also bring up a list of possible cover options and the companies that would provide for you. We found a list of Insurance companies such as AXA, Berkley, Ageas, Optima and Zurich who all provide Public Liability cover to small businesses.
Public Liability Insurance can range in price from £80 – £1000 so shop around, talk to colleagues and make sure and haggle! Some insurance policies also include additional cover in the case of loss or damage to your work tools such as laptop, phone, printers etc. This is also worth considering.
Hopefully this post has also been helpful in getting started.