As business owners, there are so many things to think about to make sure the company keeps running, including utilities, wages, business growth, and insurance. Many business owners think that simply having one type of business insurance is enough, but often this isn’t the case!
In this article, we will explain what business insurance is, run through the different types of business insurance, and explore how business income protection insurance differs to help you decide which insurance policies your business needs. Let’s get into it!
What is Business Insurance?
Business insurance is a term that covers a number of different insurance policies, designed to help protect business owners, assets and employees against everyday risks, such as property damage, liability claims and operational disruptions.
Certain types of business insurance, such as employers’ liability insurance, is a legal requirement, whereas others can be taken out at the owner’s discretion.
Different types of Business Insurance
As we have mentioned, the term ‘business insurance’ covers a broad range of different insurance policies, designed to protect the company and its employees against certain events. Let’s explore some of the most popular types of business insurance that are taken out by company owners.
Employers’ liability insurance
Employers’ liability insurance is a policy that is designed to protect business owners and their employees, including ex-employees, in the event that they become injured or unwell as a result of working for you. It is a legal requirement in the UK, and covers the costs of any legal or compensation expenses, as well as other damages.
Public liability insurance
Similar to Employers’ liability insurance, public liability insurance protects a business in the result of a claim made against them by a member of the public - for example if a customer got injured or someone’s property got damaged.
Professional indemnity insurance
Professional indemnity insurance protects businesses from legal costs and compensation claims if they are accused of providing substandard services or advice to their customers. It can cover a range of incidents, from minor errors to major oversights, including breach of professional duty, misrepresentation, negligence, or giving incorrect advice that leads to a financial loss for the client.
Business interruption insurance
Business interruption insurance is a policy that covers businesses for the loss of income if they are unable to operate as normal due to an unexpected event, such as a flood, a fire or a cyber attack. It can be used towards ongoing expenses such as rent, wages, and utility bills during recovery, ensuring financial stability until normal operations can resume.
Commercial property insurance
Commercial property insurance protects the physical assets of a business, including the building and its fixtures and fittings. It can help cover the costs of repairs or replacements if the property is damaged by an insured event, such as fire, flood or weather damage.
What is Business Income Protection Insurance?
While ‘business insurance’ includes a broad range of policies that cover businesses for a number of different instances, business income protection insurance, otherwise known as Group Income Protection insurance is a single policy that is designed to help businesses cover the cost of wages if an employee is unable to work due to illness or injury.
Income protection for business owners will regularly pay employees a percentage of their salary, usually up to 75%, if they are too unwell or injured to work. This policy enables employees to recover without the concern of losing income and contributes towards employers paying a salary for work that isn’t being completed.
Misconceptions about Business Income Protection insurance
Business income protection insurance is designed to help businesses pay regular salaries to their employees in the event that they are unable to work due to illness or injury. Despite its importance, business owners might hold misconceptions about this type of coverage, which can prevent them from securing the protection they need. Let’s address some of those and explain why having the right coverage is essential for your business.
Myth #1: "I don’t need it because I have business insurance."
A business owner might believe that their standard business insurance will cover all risks, including income loss. However, depending on the types of business insurance you have, these policies usually focus on protecting the company’s physical assets, liability, and operations, not the income of employees. Without business income protection, if illness or injury prevents your employees from working, your business may face the requirement to pay a wage for a job that isn’t being completed!
Myth #2: "Only large businesses benefit from business income protection."
It is a consideration for a business whatever its size. Small businesses could be more vulnerable when it comes to income loss. A key employee’s inability to work due to illness or injury can cause significant disruption, especially in smaller businesses. Income protection ensures that a percentage of wages are still paid while the employee recovers, reducing stress for both parties and increasing employee morale.
Myth #3: "Business income protection is too expensive."
The cost of business income protection insurance could be seen as a barrier, but in reality it can be more affordable than expected. Premiums vary based on a number of factors, including your business type, location, number of employees and type of work, but many plans can be flexible to suit different budgets. Considering the financial risks of not having coverage - such as reduced employee retention, or ongoing business salary costs - investing in this insurance can be a worthwhile expense to save your business from financial strain.
By addressing these misconceptions it's clear that business income protection insurance can be a valuable insurance policy for businesses of all sizes, whether you're a small business owner or a larger company, Group Income Protection insurance can be a safety net for owners and employees alike.
Which type of insurance does your business need?
As business owners, deciding what types of business insurance are necessary can be a minefield. With so many different policies on the market, figuring out what is and isn’t covered can be confusing. Let’s look at some of the most important considerations when deciding between insurance policies:
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Business structure: The way your business is set up, for example as a partnership or a limited company, will impact your requirements
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Risk exposure: The nature of your business also determines the risk. Employees within high-risk industries, such as construction, could be more likely to become injured at work and so are more vulnerable to income loss.
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Impact on business continuity: Group income protection can help ensure that your business continues to run smoothly even if an employee, or multiple employees, need to take extended time off due to illness or injury. Certain types of business insurance will protect assets, property, and operations, while business income protection protects employees if they are unable to work. Combining both can provide a safety net, offering peace of mind that your business is protected from different angles.
Choosing the right cover is about balancing risk and reward. With the right insurance in place, businesses can help ensure they remain financially stable allowing for growth, continued operations and long-term security.
How Wiltshire Friendly can help
Wiltshire Friendly is a specialist income protection provider, providing business income protection insurance to employers up and down the country. On top of our Group Income Protection offering, we can provide income replacement cover to individuals, and sports players who are unable to work due to illness or injury.
To apply or or discuss your requirements with us, please get in touch today.