It’s a good thing that you ask, and the following two statistics really prove why. As reported by Forbes, one survey found that only 3 in 10 small business owners have a basic insurance policy in place. However, judging from another survey cited by Entrepreneur.com, at least one in three small business owners experienced an event that could have led to a claim, in the 12 months to October 2018.
It doesn’t take too much in the way of mental arithmetic to realise that these figures won’t equate to positive outcomes for all the businesses involved. Simply put, it means that too few small businesses are insured for the likelihood of a claim coming disconcertingly towards them in the near future. However, it’s also understandable that small businesses can be hesitant to fork out for these additional costs.
The overarching title ‘general’ here gives you a good indication that it isn’t a ‘one-size-fits-all’ figure. Like with other insurance policies, there are many different factors involved in defining how much a general liability insurance (GLI) policy will cost for a specific small business. For instance, if we were to work out the average cost of policies across the UK, the cost would sound very agreeable for some, but not for others.
Now, many trades businesses, whose staff work in more risk-conducive and hazardous environments, might laugh, were that ‘average figure’ to come in at less than £1000p/a. However, this figure would reflect that there were also many other significantly lower quotations for small businesses who operate remotely, perhaps from home. In – and here’s that word again – general, the following criteria will be considered by your insurance company when they calculate the cost of a policy...
Primarily, the type of business you run, and industry you work in, will give insurers a clear indication of how low or high-risk an operation they are dealing with. Every industry carries its own spectrum of hazards – most of which you will already be aware of. If you are looking for some useful questions to ask yourself before contacting an insurer, The Business Journals have put together several simple ideas for determining your most likely risks.
Beyond the type of business you run, its size and the condition of your business premises will be influential factors on your policy. Quite simply, larger premises mean a higher chance of trips, falls and accidental injuries, while the building’s age will also come into the equation. Newer buildings and workspaces will often mean slightly lower GLI quotes than older, more hazardous alternatives.
The number of staff you employ will also impact your insurance policy. Just as more floor space increases the chances of an accident, a higher number of employees increases the possibility of your personnel damaging a visitor’s equipment. As well as your full- and part-time staff, you must also disclose the number of temporary staff or sub-contractors you employ, in order to receive a policy that accurately reflects your business.
Your location can also influence how much a policy will cost. For instance, urban areas will be burdened by higher crime rates, including theft, than a rural location. Although this can influence the cost of your insurance policy, it must be said that, if you haven’t yet decided on a location for your business, this shouldn’t alter your decision making.
Additional factors include your claims history, policy features individualised for your industry, and any deductibles you pay before your policy kicks in. You can help some of these factors yourself, too, by continuously and rigorously working to reduce hazards and investing in a security system for your premises.
Inc. paints the picture of an entrepreneur running a virtual company, with no ‘bricks and mortar’ location, who questions the necessity of a general liability insurance policy. While the business in question might not encounter any significant hazards, the example of copyright infringement is used to highlight the broad and unpredictable nature of the claims that a small business owner can face – even when they operate from a single, mobile workstation.
Along with copyright infringements, both libel and slander claims have been steadily on the rise, due to the popularity of social media, blogging and digital communications. These modern business essentials give anybody the opportunity – however unintentional or accidental – to instantly and eternally upset another individual or business. If digital media is in your marketing strategy, general liability insurance should be behind your business.
With third-party bodily injury cover, third party property damage and optional product liability, your small business will also be covered for physical or property damage, and harm caused by your product range. While many business owners can be resolutely blasé about such instances occurring, one thing that does stir fear in everyone is the concept of the false claim. Should someone attempt to take advantage of your business, it makes sense to be covered for the cost of proving to the world the unethical yet unnerving error of their ways.
The fact is that every business needs some level of liability insurance. The temptation, particularly for new and small businesses, is to risk going without, and spending money elsewhere. Yes, there’s certainly the chance that investing more money elsewhere could help your business to grow more swiftly. Furthermore, yes, as we hinted earlier in the article, you’re more likely not to encounter a claim in the next 12 months than you are.
Still, do you really want to take the chance? Plus, if you do manage to grow your business, at what point will the price of insurance become more appealing? It will grow with you and protect you as you expand. By sticking with the same provider, you could also benefit from any applicable reductions that are offered, and receive regular advice on how to keep your premiums down.
Investing in general liability insurance from Be Wiser is like buying a little extra peace of mind. It means that any hint of a claim heading your way won’t leave you lying awake at night, and you’ll be able to keep running and growing your business. Call our team today on 0333 999 0802 to discuss the ideal policy for you.