Legally required cover
In the United Kingdom, there are certain business insurance covers that are a legal requirement. The most important is employers liability insurance. There is an act of parliament, the Employers Liability (Compulsory Insurance) Act 1969, which supports this. Most employers have a legal responsibility to insure against liability for injury or disease to their employees. They’re only obliged to cover incidents arising out of their employment.
The legal requirement for motor insurance also applies to businesses. The legislation supporting this is the Road Traffic Act 1988. Third party insurance is the legal minimum.
If your office has employees or business vehicles, you have a legal requirement for some form of insurance.
Other covers that are available
As well as the compulsory covers we’ve noted above, there are others available.
Most businesses will own some form of asset. This can be anything from office furniture to computers. These items could be damaged or stolen. Cover is available against a range of perils (or causes) such as:-
Storm damage, causing rain water to enter the building
Burst pipes, causing the premises to suffer water damage
An item being stolen, or damaged during a break-in
Broken window glass, including boarding up costs
Most business insurance policies only cover contents at the risk address. You’ll need to specify certain things, to get this cover. Insurers will need to know the type and value of all portable items. Where the items are usually taken, is also a factor. A laptop regularly travelling around the world, rather than the UK, is more susceptible to damage.
A business suffering a loss to their contents, may face further costs. These additional losses are the interruption costs to the business. If the main business computer servers are stolen, the business may stop trading. The business could trade elsewhere, temporarily. The alternative is that they cannot trade until new equipment is delivered and set up. Eventually, the business will face additional costs.
There are three main liability covers for a business to consider:-
As noted above, this is a legal requirement. If an employee is injured or suffers an illness or disease in the course of their employment, your business could be liable. It is important to realise an employee could be injured by a third party. It is not always the employing company that is at fault.
This is not a legal requirement. It is your responsibility to other people, who are not employees.
Not every office produces a physical product. However, this cover is usually available where the business does provides more than a service. It is cover for damage or injury caused, by the product.
Most office based businesses are professionals. Accountants to auditors and insurance brokers to export advisers all provide a service. If they fail to deliver this service, they could be held liable. Unlike the liabilities above, there needn’t be physical damage or injury. Instead, there needs to be a financial loss. This cover is professional indemnity. It is usually provided as a separate, stand alone, cover from a specialist insurer.
Directors & Officers liability (D&O)
As well as the three liabilities and professional indemnity, there is a further potential source of claims. Most companies have people in senior roles. If a limited company, they may be directors. If not, they are senior officers, or officials, in the business. These individuals can face claims, if they fail to act and undertake their business duties correctly. This is not economic cover. You cannot buy cover if your sales director fails to meet target, for example.
D&O covers alleged wrongful acts, such as:-
Breach of duty or trust
Breach of regulations
How to get cover
Nearly all of these office insurance covers are provided within a packaged policy. These policies contain the usual covers and office may need. Separate policies are provided for professional indemnity and directors & officers liability.
There are a few insurers that provide an umbrella policy, with all covers. Overall, this may not be the most competitive option.
Using a business insurance broker
A broker will help you get the widest cover, for the best premium. If you’re already insured, they’ll review your current covers to. The good thing is, this is all provided free. A broker will not charge a fee to review your insurances.
Our question was, do I need office insurance cover. Having read this brief summary, you should be in agreement. Please contact Clark Thomson if you have any questions on office insurance.