Your business safety net

Running a small business is engaging and enjoyable. We love the game, what we do, the people we meet and the buzz of being rewarded by our customers when they pay us.

It is so easy to forget that things can go wrong, and usually it won’t be our fault.

Suppose we might make a mistake which costs our client money. It does happen as no one is perfect, however much we guard against errors. Human nature being what it is, a customer might think we have made a mistake and cost them money, when we have not put a foot wrong. Either way, we need to be insured against action against us. Otherwise a vindictive client entirely in the wrong can cost us a lot of money and ruin our business. Professional indemnity insurance is essential and public liability insurance is important too.

Then again, how well are we insured against damage to our premises? Is our insurance up to date? Do we insure against loss by backing up all our data off-site?

Suppose our key staff have health issues and are off sick for a long time. What if we get sick and need to take time off? Are we insured to hire substitutes? Is our business income insured? Is our health insurance up-to-date?

Being insured for every eventuality sounds expensive, but when we think of the alternative of disaster and poverty we should grit our teeth and pay our premiums. Do you pay yours?

Why we need the assurance of business insurance

26 Feb 12 upload 011It seems obvious that we should insure our houses and our house contents. We have to insure our cars by law. Strangely many people do not believe in insurance for their businesses.

Of course it is true that many contractors under the control of other people or businesses (such as builders) have to have their own Public Liability Insurance. Many business owners, worried about the cost, skimp on this. Yet the insurance is not expensive. The consequence of not having it can be catastrophic if a customer has an accident and sues, because the cost of defending can be disastrous.

If a mistake in the work we do can result in a loss to a client, we need to be insured against that. Professional Indemnity Insurance covering being sued for at least a few hundred thousand seem sensible. I wouldn’t be without mine, though, touch wood and taking care, I have never had a claim. Again, even if we have done nothing wrong, the cost of defending an action can be terribly expensive and destroy a business, and maybe our wealth.

If we have a business with particular employees or of course ourselves as owners, we can insure against loss of their services in what is known as key-person insurance. It is intended to compensate for business losses in case the important person dies or is unable to work again due to illness.

I insure against loss of business income if I were to be ill and unable to run my practice. Shouldn’t everyone?

You and I may never have a loss of someone’s services or be sued, but you never know. Most of us keep an umbrella handy, don’t we? Why should we leave our businesses and our income open to the elements?

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