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In fact, 30 per cent of small businesses do not have any insurance.  Here Chris Little, Managing Director of Premierline Direct gives advice on what level of cover a business should have and explains the key areas of a policy.

The research conducted by a leading business insurance provider shows businesses are putting themselves at risk to over £3billion of potential claims and liability costs and that many businesses do not have adequate cover.

Business insurance is perhaps seen as a necessary pain; owners know they should have it but may not often consider the potential risks their business faces. That is until the time comes when they may need to make a claim and realise they never paid attention to the details of the policy and may not have adequate cover.  Appropriate insurance cover is vital for peace of mind and for the future prosperity of your business.

Examine whether your policy actually covers the business’ needs as these can change over time and if the same policy has been in place for the last few years, it could be likely that it no longer provides adequate cover.  Our research has shown that only 40 per cent of businesses have re-valued their assets for their business insurance policy within the last 12 months.  

It is essential to calculate the right amount of cover to purchase as the insurer will only pay out for the amount that is covered.  Check cover limits for each element of the policy as these can vary between insurance providers and don’t be afraid to increase where necessary.  

Check what the standard cover includes and make sure it has the essentials such as public and employer’s liability insurance, which is fundamental for most businesses.

No matter what size the business, it is important to cover the cost of compensation awarded to someone who becomes injured or has their property damaged arising from negligent activities connected with your business.  Employer’s liability is a legal requirement for any business that hires staff, even if they’re part-time or working cash in hand.  

Public liability will protect you against the cost associated with injury to a member of public or damage caused to their property.  While it is sometimes available under household insurance, this cover will generally only cover events arising in your personal capacity and won’t necessarily go as far as covering your business activities.

Also, your household policy may not provide cover if you have omitted to tell your insurer that you are operating a business from home.

In addition, any business that offers advice to its clients should consider professional indemnity cover, which means that if your advice leads directly to someone suffering a loss, you’re covered for the cost of defending the case and any payout made.

While most professional indemnity policies are designed for big business, there are insurers that provide cover for small businesses that want lower levels of cover, with lower premiums to match.

Also check what extras come as standard in the policy, which can help ensure the smooth running of the business.  For example, a policy that offers automatic cover for situations such as damage to fixed glass and sanitary fittings, loss of money and goods in transit, can prove invaluable when needed.