Business insurance and risks: how to make the right choice
2 min
Starting your own business means taking risks. But you can minimise them by choosing the right insurance policies. Which ones do you need? It depends... and we’ll explain why!
The insurance you need for your business depends on the nature of that business. For example, a building contractor doesn’t face the same risks as an independent IT consultant or a restaurant owner. Here’s what you need to know in order to define what you need.
Business insurance: mandatory or not?
Depending on the sector, some insurance policies are mandatory, often when your activity may affect other people, such as employees, customers and passers-by. But even when they’re not legally required, some insurance policies are highly recommended, such as fire insurance, covering damage that could happen to your premises and could have a significant impact on your business.
Professional liability insurance: a priority
In law, the principle of civil liability means that if you cause damage to someone through wrongdoing or error, you must make good that damage, usually by compensating the victim. The same principle also applies in a business context.
Fortunately, there are insurance policies that cover your professional liability.
The nature and scope of the risks arising from civil liability differ greatly depending on the profession and individual context, so liability policies will take those differences into account. You can choose a comprehensive professional liability policy that covers most situations in which your civil liability may be invoked. Or you can opt for a more specific policy, tailored specifically to the construction sector or medical profession for example.
The main types of liability cover
Professional liability cover can vary depending on the policy and its content. However, comprehensive liability policies will always cover operational liability and often include things such as property in care, custody or control, property after delivery, and in some cases liability relating specifically to intellectual activities such as accountancy and consulting.
Here are a few examples:
- The sign on the front of your store falls and injures a passer-by: your operational liability cover will compensate them.
- You are asked to install software on a computer, but you damage it: the damage will be covered by the property in care, custody or control part of your policy.
- A pipe of the dishwasher you just installed comes loose and causes water damage: your property-after-delivery cover will step in to compensate for the damage.
Liability insurance for fire and explosion: mandatory in certain cases
Imagine a fire in a restaurant that causes injuries. The restaurant operator will always be legally required to compensate the victims, even if the operator is not responsible for the fire. This is called no-fault civil liability.
Liability insurance for fire and explosion protects you from this kind of situation by stepping in and compensating the victims. It’s a legal requirement for certain types of establishment.
Vehicles: mandatory insurance and other useful types of cover
The vehicles you use in your business – car, van, truck, motorcycle etc. – can also be covered by insurance. And the most well-known type is actually a civil liability insurance policy, often referred to as motor insurance. If you use a motor vehicle on public roads, you will be required to take out a policy of this type, which will cover damage caused to others in the event of an accident in which you are at fault.
You can also supplement your cover by opting for a comprehensive policy that covers damage you suffer yourself. Other vehicle-related insurance policies target specific risks, such as theft or damage to your goods or equipment while in transit for business purposes.
Work accidents: mandatory insurance for employers
If you need to hire staff in order to start your business, you will be required to take out insurance that covers your employees in the event of an accident at work or while commuting. If a victim is unable to work, the insurance will pay a daily allowance and reimburse any medical expenses. It will also step in where an employee suffers a permanent disability or death. The amount of the allowance will be calculated on the basis of statutory scales.
Take the test to choose the right insurance policy
Depending on your profession and the context in which you work, there are many situations in which you will need protection. Always analyse your risks in detail to choose the right cover. And make sure you repeat the exercise as your business evolves.
To guide you, take this test to find out which insurance policies are mandatory, essential or useful for you and your business, depending on your activity.