Today, we’re diving into the world of SME insurance. We’ve already laid the foundation with our Business and Personal Protection Insurance 101 article, but there’s so much more to explore.
The Big Picture: Why Insurance Matters
You’ve got a vision, a brilliant team, and a product or service that’s changing lives. But guess what? None of that matters if you’re not protected. It’s not the most glamorous part of running an SME, but it’s one of the most essential. According to a 2022 report, about 40% of small businesses will have a property or liability insurance claim in the next ten years. That’s almost half!
Delving Deeper: Types of Insurance
Let’s get a bit more nuanced with our understanding of SME insurance. We’ve already covered personal protection insurance, business protection, and SME protection in our previous article. But did you know that there are over 20 different types of insurance policies out there? We won’t bore you with all of them, but here are a few that might be new to you:
- Cyber Insurance: With our increasing reliance on technology, cyber insurance is becoming more important than ever. This type of insurance helps to protect businesses from internet-based risks and, more generally, from risks relating to information technology infrastructure and activities. Given the rise in cyber attacks, especially on SMEs, cyber insurance can provide peace of mind and financial protection in case of a data breach or other cyber threat1.
- Product Liability Insurance: If your business involves selling products, you should consider product liability insurance. This coverage helps protect your business in the event that a product you sell or produce causes harm to a consumer. This could be due to a manufacturing defect, design flaw, or failure to provide adequate warning or instructions.
- Professional Indemnity Insurance: Particularly relevant for businesses in consulting, advisory, or professional services roles, professional indemnity insurance protects your business if you’re found to have provided inadequate advice, services, or designs that cause your client to lose money. It’s a way of ensuring that if mistakes do occur, they don’t jeopardise your business’s financial stability.
- Employers’ Liability Insurance: In the UK, employers are legally required to have employers’ liability insurance. This type of insurance protects you as an employer from claims of negligence made by employees who’ve been injured or fallen ill as a result of their work.
- Public Liability Insurance: Public liability insurance covers you if a member of the public suffers an injury or property damage due to your business activities. Whether it’s a customer slipping on a wet floor or a passerby being hit by falling debris, public liability insurance can help cover the legal costs and any compensation claims.
- Business Interruption Insurance: This insurance compensates businesses for lost income during events that disrupt normal business operations, such as a fire or flood. This can be a lifesaver for businesses that experience a significant event leading to a temporary closure or substantial disruption.
- Commercial Property Insurance: This insurance protects your business against damage to buildings and contents due to a covered cause, such as fire, storm, or theft. This policy can help you replace or repair physical assets like buildings, equipment, inventory, and furniture.
- Key Person Insurance: Key person insurance can be crucial for SMEs where one person holds a significant amount of the business’s value. If this key individual were to pass away or become unable to work, this insurance could provide a safety net to help keep the business afloat.
These are just a handful of the many types of insurance available to SMEs. Depending on your industry, the nature of your work, and the specific risks your business faces, there may be other types of insurance that would be beneficial for you. Consulting with an insurance advisor can help you make sure you have the right protection in place for your specific needs.
Real Talk: SME Insurance Stories
Enough of the theory, let’s get real. We’ve rounded up a couple of stories from SMEs who’ve faced insurance claims. They’ve graciously allowed us to share their experiences with you (anonymously, of course).
Story 1: The Unexpected Flood: This company didn’t think they needed flood insurance until a water pipe burst and damaged their offices. They ended up being out of business for two weeks!
Story 2: The Cyber Attack: A small online retailer was the victim of a cyber attack that stole customer data. Without cyber insurance, they would have been liable for the breach.
Conclusions: Insurance as a Growth Tool
Insurance isn’t just about protection—it’s about growth. With the right insurance policies in place, you can take calculated risks and pursue opportunities that might otherwise be out of reach. So, don’t view insurance as a cost but as an investment. An investment in your business’s future, your team, and your peace of mind.