Insurance misconceptions

Hugh J Boswell – Business Insurance tips

Business insurance is essential for all business owners as it acts as a safeguard in the event of an accident, theft, or other problems. However, with so many different areas of business insurance concerning employees, buildings, contents, and liability, it can be hard for business owners to know exactly what they need. This is especially true if their business operates in a more specialist or niche field.

Whether they own a small business with a few employees, or a large company with hundreds of employees, business owners need to ensure they have sufficient cover. If they overlook a detail and have inadequate insurance, business owners could face significant financial costs should something happen that isn’t covered by their policy.

Being aware of some of the misconceptions surrounding insurance, and the realities behind them, can put business owners in a much better position to purchase the cover they need.

Hugh J Boswell Associate Director Joe Howard recently covered this topic in an interview with leading financial comparison site Know Your Money. Joe provided Know Your Money with his top 5 Insurance myths that customers keep encountering.

Here’s a summary of Joe’s findings:  

Buying insurance through a broker is more expensive than buying it directly from a company online.

Many people automatically assume buying insurance direct from a company is better than through a broker, as it removes the cost of the middleman. However, in most cases, this is not true. Insurance brokers offer advice and ensure the business owner has all the cover they require, which can give individuals peace of mind that they are fully protected.

Several brokers also specialise in certain areas, which means they are well-placed to find the best insurance deals. Brokers should find suitable policies fairly quickly as they are much more experienced than business owners at finding the necessary cover at a good price. Going through individual insurance providers and trying to understand the terms of each policy can be very time-consuming, especially if your business is more niche or has more unique requirements, and you may still risk ending up with inadequate cover. Brokers, on the other hand, are in a position to negotiate specifically tailored policies at preferential rates with insurers to ensure your business is fully covered at a fair price.

My private car insurance covers me to drive any car.

Whilst people with comprehensive car insurance often used to be covered to drive any other insured vehicle, this is becoming much less common. Most drivers with private car insurance will not automatically be covered to drive other cars, and, at the absolute minimum, would have to notify their insurer before driving another vehicle.

Even if your insurance does enable you to drive vehicles other than your own, this would normally be the minimum third-party cover, rather than comprehensive. It may also come with certain conditions, that it could only be driven in an emergency for example. If you are planning to borrow someone’s car, it would generally be more beneficial to buy temporary insurance or be added to their policy as a named driver, rather than relying on any cover your own policy may provide. Driving without insurance comes with severe risks and punishments, so you should always check you are covered before driving another vehicle.

All the cyber protection I need is covered by my IT system provider.

Cyber insurance is something many business owners don’t think about as they believe their IT system provider gives them enough protection. However, even if a company has fully-trained staff, the best and most up-to-date anti-virus software, firewalls, and performs regular back-ups, which can all help to prevent cyber-attacks, there is still an element of risk that the system provider may not be able to help with.

In 2017, 43% of business suffered a breach, which shows how easily an issue can occur. If just one safeguard fails, your business could face a number of costs that the software provider isn’t liable to fund. Particularly for businesses that primarily operate online or store a lot of sensitive information on their computer system, cyber insurance can help to limit any damage should something go wrong.

As Joe covers in his Know Your Money interview ‘Business Insurance Myths‘ – Cyber insurance can act as an additional level of protection for businesses in the event of a breach or cyber-attack. It can sometimes be bought as an extra with a standard business insurance policy, but some businesses may prefer to purchase a more comprehensive, stand-alone cyber insurance policy. Among other things, a cyber insurance policy can help with:

• Restoring systems after an attack
• Notifying data subjects if sensitive data has been compromised
• Reimbursing damages and costs arising from claims made against you
• Compensating any costs incurred from IT services used to recover after an incident

Work experience students are not classed as employees. They are the responsibility of their school or college.

Although work experience students are only with the business for a short period of time and may not seem like employees, they are still viewed as the responsibility of the business. Whilst they are on their placement, businesses have the same duty of care to work experience students as they do to the rest of their workforce.

In terms of health and safety, work experience students are regarded as employees. This means they could claim against your business if they hold you to blame for an injury/illness gained whilst in your care and custody. When taking on a work experience student, you should follow the same health and safety procedures as you would with any new employee, and ensure any necessary risk assessments are in place.

There is not normally a need to purchase additional insurance for work experience students as they should be covered by your Employers’ Liability Insurance. You may wish to notify your insurance advisor if you regularly offer placements, to keep them informed about your circumstances. If there is any doubt, you should check your policy documents or consult your insurance advisor.