Most small business owners I speak to are passionate about what they do and proud of the service they offer their community.

But that doesn’t mean they love every aspect of running a business. Whether you’re a landscape gardener or you have a high street coffee shop, there is always admin to take care of, from doing the books to chasing up invoices.

One area people often ask me about is business insurance. It can be difficult to navigate the different types of cover you may need, and it’s not always clear where to go.

So here are my top ten things you need to know about business insurance - I hope it will save you ­time and effort, so you are free to focus on the things you love about your business.

Every business is different

This may seem obvious, but it’s important to start by saying that every business has different insurance needs. A builder faces different risks to a hairdresser or dog walker.

Your own risk depends on factors including the type of work you do, the industry you work in, the size of your business and where you’re located.

For example, if you sell products, you might consider product liability insurance in case something turns out to be faulty or causes an injury. Providers of professional services, such as architects or accountants, may need to think about professional indemnity insurance.

Have a look at all the different covers your provider offers and consider those that align with your business.

If you have staff, you have to have insurance - it’s the law

As soon as you employ someone, you are legally required to have employer’s liability insurance. It doesn’t matter if they are full-time, part-time, permanent or temporary, and the rule also applies to apprentices (there may be an exemption if they are a close relative, or based abroad).

Your policy needs to come from an authorised insurer, and cover you for at least £5 million.

Failure to be properly insured can lead to fines of £2,500 a day.

It’s never too soon to get cover

Your business can be exposed to risk even before you win your first client, or sell your first product.

Stock could be stolen, your shiny new website could be hacked, or your premises could be flooded.

Taking out insurance before you start trading could give you peace of mind.

You’re not too small to get hacked

It’s not true that hackers only target large organisations - even small firms aren’t immune to cyber attacks. In fact, any business that handles data or uses technology is at risk.

According to government figures for 2020, 46% of British businesses and charities faced a cyber attack.

The impact on a small business can be huge, from the cost of replacing computers and ransom payments to hackers, to being unable to trade while the attack is ongoing.

You may also lose customer goodwill if their data is breached.

Cyber insurance is designed to protect your liability against certain digital risks and may also help your business recover.

Cheapest isn’t always best…

Times are tough, so of course you are going to consider price and try to get the best deal for your business.

But the cheapest insurance may not be the right fit for you, and could even turn out to cost a lot more in the long run if you are unable to claim for a loss. It’s important to check that the cover you buy is appropriate for your business needs.

…but neither is the most expensive

Equally, if insurance is coming up as expensive, check that the cover levels are right. For example, if your stock is worth £5,000, there is no need to buy an expensive policy that covers stock worth up to £10,000. You don’t want to end up wasting money on insurance you don’t need.

Beware of exclusions

All insurance policies contain exclusions, which can be a common reason for a claim to be declined.

Claims teams are on your side – they don’t set out to find any reason to decline a claim. But if what you’re claiming for is specifically excluded, they will not be able to approve a payout.

It’s always worth reading all the documentation you’re sent when it comes to insurance - taking a few extra minutes now could save you a lot of money in the future.

Don’t forget the excess

You’re probably used to an excess with your home or car insurance, and business insurance is no different.

An excess is an amount you pay towards a successful insurance claim. For example, if you have a £250 excess, and your £1,000 laptop is stolen, then the insurance company will pay you £750.  In some cases, you may have to pay excess before the insurance company will pay.

It’s important to note that you may have different excesses within one policy, relating to different covers or types of claims.

As a general rule, the higher the excess, the lower the premium, so you need to strike a balance between how much you can afford if you need to claim, and how much you are happy to pay for your policy.

Check the ratings

UK insurers are regulated by the Financial Conduct Authority (FCA), and you should be able to find evidence of this on their website.

You should also look out for regulatory ratings – a score of A or higher from A.M. Best, Lloyd’s, S&P or Fitch suggest that a provider has a strong capacity to meet financial commitments - including paying claims.

Insurer v broker

You may already use an insurance broker for your house or car, or you may deal directly with an insurance company.

Again, the same distinction applies to your business.

The insurer provides the cover, while a broker advises you and negotiates with the insurance company on your behalf, in return for a fee or commission.

Brokers can be helpful if you are unsure of your insurance requirements or have complex needs.

How TSB can help your business

TSB has a partnership with business insurance specialist Superscript offering personalised cover for businesses big, little and bold.

With Superscript, you can pick the type and level of business insurance you need and make it work for your business. Click here to find out more.

For more information on ways TSB can help you and your small business, click here.