And remember the rule of eventuality: if there is a risk that something might happen then given enough time it will probably happen.
Some insurance is also required by law.
Below is a quick introduction to business insurance and a simple summary of business insurance types.
Important: Offered here is information but always seek professional advice before making any decisions.
Quick summary insurance types
- Commercial Vehicle insurance
- Employer’s Liability insurance (EL)
- Public Liability insurance
- Product Liability insurance
- Professional Indemnity insurance
- Business Buildings insurance
- Business Contents insurance
- Income Protection insurance
- Business Interruption insurance
- Business Legal Protection insurance
- Electronic Equipment insurance
- Cyber insurance
- Stock insurance
- Personal Accident insurance
- Director and Officer insurance
- Goods in Transit insurance
- Money insurance
- Industry Specific insurance
Insurance – what is tax deductible
As a general rule of thumb, insurance to do with the business is tax deductible. This means you can add the cost of any insurance relating to the business as an expense. Your taxable profit will therefore be net of this expense.
Personal insurance such as Personal accident insurance is about you rather than the business which means this is not a business expense and not tax deductible.
Insurance falls broadly into two categories
- Legal requirement and protection insurance
- Protection insurance
Provided below are general indications of each insurance type and their usual intentions.
You must always confirm with your chosen insurance company the details and conditions of coverage.
1. Legal requirement and protection insurance
Some insurance is legally required. For example, it is illegal to drive a vehicle on the road in the UK without adequate insurance.
Some professions and vocations also require additional insurance. For example, professions such as accountants and solicitors require Professional Indemnity insurance in order to operate.
From a general business perspective there are only two insurance types that are legally required in the UK.
Commercial Vehicle insurance
Protects the driver and passengers, the vehicle and others against theft, accident or other events associated with the vehicle.
Employer’s Liability insurance (EL)
Protects you against claims made by employees due to injury or other health issues occurring as a consequence of working for your business.
2. Protection insurance
Although not legally required, the insurance types listed below are designed to protect the business and you.
This is about protection and should be considered carefully.
The great news is that insurance offers two valuable things: protection and peace of mind (do not underestimate the value of peace of mind).
Public Liability insurance
Protects you from the consequences of claims made by the public due to physical interaction with your business.
Product Liability insurance
Protects you from the consequences of claims made by the public due to the purchase or interaction with your products.
Professional Indemnity insurance
Protects you from the consequences of claims due to an action you have taken in the service of your customers or clients.
Business Buildings insurance
Protects the business premises against the financial cost of damage.
Business Contents insurance
Allows you to claim the value of property lost or damaged on your premises due to fire, accident or theft.
Income Protection insurance
Provides income cover in the event of injury or illness.
Business Interruption insurance
Protects your business from lost earnings due to an unforeseen event.
Business Legal Protection insurance
Covers the cost of any legal actions or disputes you may incur during the operation of your business.
Electronic Equipment insurance
Covers the cost of replacing equipment that is damaged or stolen and the cost of recreating the data lost (to a limit).
Cyber insurance protects your business from the consequences of a cyber attack.
Specific cover for stock that is lost, damaged or stolen.
Personal Accident insurance
Personal accident insurance covers you personally against the financial consequences of serious injury or death.
Director and Officer insurance
Protects company directors and officers against alleged breaches regarding duty of care.
Goods in Transit insurance
Protection against goods lost, stolen or damaged during transit.
Protects against money being stolen or lost.
Industry Specific insurance
Insurance products designed for your specific business sector.