5 business insurance FAQs

We don't claim to be the oracle for everything there is to know about professional insurance. But we're pretty close. If you've got any business insurance FAQs niggling away, it's a good bet we can answer them.

So, right on cue, here are five business insurance FAQs head-scratchers we've had put to us...along with their answers.

Top 5 business insurance FAQs (and their answers)

1. I'm an engineer and my wife's an accountant. We work under the same limited company name and we both need professional indemnity insurance. Can we have just one policy?

'Fraid not.

Different occupations involve different risks. When you buy professional indemnity insurance, your insurer issues a policy that covers those specific risks.

Accountants and engineers do very different things. They're both specialists in their own right, and one policy wording covering both just isn't possible. There's no 'one size fits all' insurance, and that should be seen as a good thing – everyone gets the cover they need.

Buying two insurance policies for one business might seem like an inconvenient expense. But, when it comes to fighting a claim, it pays to have the right cover.

2. If I pay annually and cancel my insurance mid-year, will I get a refund for the months not used?

Yes, you'll get a pro-rata refund proportionate to the time left to run on the policy.

This is a good time to point out, though, that professional indemnity is a 'claims made' policy. This means your insurer will only pay your claim if your policy is running when you do the work and when the claim is made.

Say you cancel your policy, only for a customer to later allege there's a problem with your work, your insurance wouldn't be able to help. Our article on claims made insurance explains more.

3. I don't know my annual turnover or payroll yet as I'm just starting out. How can I get a quote?

It's probably useful to explain why we ask for these figures.

In simple terms, your turnover affects your professional indemnity insurance, and your payroll affects your employers' liability insurance. The higher each figure is, the more each insurance costs.

To an insurer, it's simple maths. High turnover = a lot of work or high-value contracts; high payroll = lots of staff. In either case, the chances of a claim (or an expensive claim) are higher, so they charge more.

If you don't know exactly how much yours are or will be, your best estimate is fine. We appreciate it's hard to be exact when you're a new business so we don't hold you to those figures. In fact, there's leeway built into your policy to allow for changes without them costing you more. Just let us know when you have more of an idea.

Here's more about why your turnover matters.

4. When getting my public and product liability quote, I was asked where the products came from and if I alter them. Why? 

If you supply products, you'll need product liability insurance. This pays for legal fees and compensation if what you've supplied injures someone or damages their property.

But what you sell and how is important to insurers. Because they need to know the amount of risk they'll be taking on.

Let's say you're a beautician selling wellbeing and beauty products. If you buy from a reputable UK company and pass them straight onto your customers, the level of risk is considered pretty low. That's because the company you buy from will be liable if there are any claims of damage or injury, and the insurer will know the company has the financial and legal backing to pay up.

But if you buy a product straight from a manufacturer and put your own branding or labelling on it, you become personally liable. And that'll mean forking out a lot of money in the event of a claim.

It's a similar story if you buy cosmetic or electrical products from a country outside the EU. As they don't have the same strict standards for selling potentially harmful or dangerous products.

Most of our insurers offer product liability alongside public liability to anyone selling reputable third-party products. But if you're altering or making your own products, we'd suggest giving the British Insurance Brokers' Association a call to find out where you can get the appropriate cover.

5. Does your photography insurance policy cover equipment left in a car? 

As much as we'd like you to keep your kit with you at all times, we know it's just not practical or possible.

If your equipment is locked in a car boot out of sight, your insurer should be satisfied you've taken reasonable steps to protect it. If in doubt, we'd always say read your policy wording thoroughly and if there's anything you don't understand, speak to your insurer or broker. Better safe than sorry and all that.

Go ahead, ask us anything

We love tackling business insurance FAQs. If you've got a question you'd like an answer to, just email contactus@policybee.co.uk or call 0345 222 5391. We'll do our very best to help.

Image used under license from Shutterstock.