Some forms of commercial insurance are mandatory, with high penalties if you are found to be without them. Others are just smart to have. Some will be irrelevant to your business. The trick is knowing which is which.
It’s a fair bet to say that you will need some commercial insurance as a business owner. However, you will need to establish 1) What you don’t have any choice about, 2) What you really ought to have, 3) What it might be nice to have but you can manage without, and 4) What is unnecessary.
Unfortunately, different forms of insurance will generally fall into different categories depending on your business.
Buildings insurance: you should certainly have this if you own the premises in which your business is run. If not, check your contract – your landlord may well be responsible.
Contents insurance: You should purchase this if you have anything on the premises you couldn’t afford to replace if lost, damaged or stolen.
Goods/cash in transit: again, if you are transporting anything of value or have a lot of cash on the premises, consider insuring it to avoid incurring the cost of replacement yourself.
Professional indemnity cover: this kind of commercial insurance is legally required for certain professionals, including solicitors, financial advisers and mortgage brokers. In other instances it may be a condition of membership to professional bodies. Otherwise, you should consider it if the advice you give could result in harm to the client or their business (e.g. if you are a designer, PR specialist or advertiser).
Employers’ liability: you must purchase this by law if you have any employees, except under certain very limited conditions. There are high penalties if you do not have it.
Public liability: generally not mandatory, but if there is any risk to the public in the course of your work, you would have to bear the costs of a lawsuit yourself if you were not insured.
Directors and officers liability: this is a form of commercial insurance that protects managers against cases that arise from the decisions they make as leaders of the company. You will generally need this when you first put together a board of directors, and investors will usually expect it as a condition of funding your business.
Errors and omissions: this applies to harm that result from the use of your products or services. Again, it may not be a legal requirement in most cases, but you would be liable for legal fees and damages yourself without it. These could easily bankrupt even a relatively large company.
There are many other subcategories of commercial insurance, which deal with the requirements of specific professions and niches. Additionally, you might like to think about health insurance for yourself, and perhaps some or all of your employees or board members. Critical illness cover is another one to bear in mind, since without you, your business is likely to struggle – especially in the early days.
An insurance broker will be able to advise you on which policies to take out, and for how much – which will vary considerably depending on your circumstances. You can often purchase a combined commercial insurance policy, which brackets everything you need together into the one policy. This typically saves money because you are able to access economies of scale, and it vastly simplifies the process of keeping track of all your different policies.
This article was supplied by the leading firm of Irish commercial insurance brokers, Robertson Low, established in 1995 are regulated by the Central Bank of Ireland as a Multi Agency Intermediary and the only Irish incorporated ‘Lloyd’s broker’.