Do you own a business or plan to start one soon? Protecting your company from potential risks and liabilities is one of the first things you need to think about as an entrepreneur. With civil litigation on the rise and unexpected events like the COVID-19 pandemic causing widespread disruptions, having the right business insurance coverage is crucial.
Public and products liability insurance
Public liability insurance is designed to safeguard your business in the event that a customer suffers an injury or experiences damage to their property due to your business operations.
Products liability insurance provides similar protection, but specifically addresses situations where a customer experiences illness, injury, or property damage as a direct result of products manufactured, sold, or supplied by your business.
An infamous product liability case is the Liebeck v. McDonald’s Restaurants lawsuit. The case involved a 79-year-old woman who sustained third-degree burns from spilled coffee purchased from a McDonald’s restaurant. Though frequently cited as an example of “frivolous litigation”, Liebeck was awarded some $160,000 in compensatory damages.
Employer liability insurance
Employer liability insurance is not just a good business practice; it’s a legal requirement. If your business has even a single employee, you must have at least £5 million in employers’ liability insurance coverage from an authorised insurer.
The primary function of employers’ liability insurance is to safeguard your business against compensation claims filed by employees who experience injury, illness, or property damage while on the job. In today’s litigious environment, it serves as a financial safety net, shielding your company from the potentially crippling costs associated with such claims.
Professional indemnity insurance
Professional indemnity insurance is a vital protection for businesses and professionals who provide expert advice or specialised services to their clients or customers – think accountancy, legal or investment management firms.
Though it may not be substantial enough to shield you from the fall-out of a Bernie Madoff-sized Ponzi scheme, professional indemnity insurance will safeguard you against the potential consequences of professional negligence, errors, or omissions.
Management liability insurance/directors’ and officers’ (D&O) liability insurance
Directors and Officers (D&O) liability insurance provides financial protection for a company’s directors and officers in the event they are sued for alleged actions or omissions while performing their duties. These actions or omissions could include breach of trust, breach of fiduciary duty, neglect, error, misleading statements and wrongful trading.
A recent high-profile D&O case was Elon Musk’s recent lawsuit against OpenAI and Sam Altman which claimed that the company was putting profit ahead of benefiting humanity, breaching the firm’s founding mission.
Business interruption insurance
In business, unexpected disruptions can strike at any moment – think of the Covid-19 pandemic and the associated widespread business closures.
Business interruption insurance helps mitigate the financial strain by covering lost income or profits that would have been earned had the interruption not occurred.
In recent months, there have been a number of major court battles linked to Covid-19 business interruption claims between insurers and policy holders, as the former seek loopholes in “aggregation”, “causation”, and business rates relief.
Commercial property insurance
Like domestic home insurance, commercial property insurance safeguards against material damage to buildings and their contents, offering financial protection should any unforeseen events occur.
For businesses that rent or lease their commercial spaces, the responsibility for insuring the buildings typically falls on the landlord or property management company. However, it is still crucial for tenants to secure business contents insurance. This coverage protects the valuable assets you own, such as computers, specialised machinery, or furniture, against potential damage or loss.
Fleet insurance
Fleet insurance is coverage tailored to businesses that rely on multiple vehicles for their commercial operations.
With regular updates to employee rosters and vehicle acquisitions or replacements, conventional insurance policies can quickly become time-consuming to maintain.
However, unlike standard car insurance policies, fleet insurance offers a more efficient and flexible approach, making it easier for businesses to manage their ever-evolving driver and vehicle details. Fleet insurance policies may also offer an “any driver” coverage option, ensuring that your vehicles are protected regardless of who is behind the wheel.
