Which insurance does my company need?
Most companies start with business insurance. What you need beyond that depends on what you sell, the contracts you sign and when you hire. Here it is step by step.
For most companies, business insurance is the foundation. It protects property and covers liability, business interruption and disputes. What you need beyond that comes down to three things: what you sell, which contracts you sign and whether you have employees. New needs usually appear when something changes in the company, not on a particular date.
The foundation: business insurance
Business insurance is a package that usually has four parts:
- Property for computers, furniture and goods after fire, water damage and theft.
- Business interruption for income that disappears when damage stops the business.
- Liability when the company injures a person or damages someone else's property.
- Legal protection for the cost of a dispute.
Packages differ in what they include and how high the limits are. The guide on what business insurance includes goes through it.
When something changes in the company
Your needs grow with the company. These are the situations that usually raise the question.
| When | Insurance to look at | Why |
|---|---|---|
| You sell advice, expertise or services | Professional indemnity | A mistake in your work can cost the client money without anything being broken |
| You sign a larger client contract | Professional indemnity, or a higher liability limit | The client often requires a set amount in the contract |
| The company handles customer data or depends on IT | Cyber insurance | A breach can stop the business and lead to claims |
| You pay many invoices or several people can approve payments | Crime insurance | Fake invoices and false account details hit companies of every size |
| You hire staff | Employee insurance, often through a collective agreement | The employer has responsibilities for work injuries and illness |
| You bring in co-owners, investors or an external board member | D&O insurance | Management can be held personally liable for its decisions |
| The company has cars or other vehicles | Motor insurance | Third-party cover is required by law |
| You or your staff travel for work | Business travel insurance | Medical care and getting home from abroad are not always covered elsewhere |
What the client or the law requires
Some insurance is not a choice. Third-party motor cover is required for vehicles on the road, and in certain professions the law requires liability insurance. More often it is clients, landlords and lenders who write insurance requirements into their contracts. What the law requires is covered in the guide is business insurance compulsory.
Good to know. Read your contracts before you compare insurance. A lease or a framework agreement often states exactly which insurance and which amount is required, and that is your minimum.
When you hire
With the first hire comes the question of insurance for your staff. If the company is bound by a collective agreement, it includes a set of agreement-based insurances, covering work injury, illness and death among other things, that the employer must take out. Without a collective agreement they are not a requirement, but many employers take out equivalent cover anyway. On top of that there is voluntary cover such as private health insurance and accident insurance.
Frequently asked questions
Is business insurance enough for a small company?
For many one-person companies that don't sell advice or handle much data, the basic cover goes a long way. If you sell expertise or services, it usually does not cover the client's financial losses, and then you need professional indemnity.
Does my home insurance apply if I run the business from home?
Usually only to a limited extent. Home insurance is designed for private property, and the company's equipment and liability towards clients normally fall outside it.
How often should I review my insurance?
Once a year, and whenever one of the situations in the table above happens. A new client contract, a first hire or new premises are common moments when the cover no longer fits.
