Although not an exhaustive list, the following are the most common types of insurance covers required and purchased by businesses operating within the UK, depending upon their type of activity:-
Employer's Liability Insurance
This is the only type of commercial insurance which is required by law to be obtained by all businesses operating in the United Kingdom and provides indemnity (cost of damages and legal expenses) for legal liability to employees. The prescribed legal minimum is currently £5 million of cover against bodily injury, illness or disease sustained in the course of employment
Public Liability Insurance
This provides indemnity (costs of damages and legal expenses) for legal liability due to the death of, or bodily injury to, members of the public or damage to their property arising in of the course of operation of a business.
Product Liability Insurance
This provides indemnity (cost of damages and legal expenses) for legal liability due to death of, or bodily injury to, members of the public arising specifically as a result of products which a business has manufactured, supplied, installed, erected or hired out.
Professional Indemnity Insurance
Professional Indemnity Insurance (also known as Errors & Omissions Insurance) protects a business and the individuals it employs, against liability arising from actual or alleged breach of professional duty in the course of its activities. It covers the legal liability created by the existence of a duty of care owed to third parties, usually its clients. Professional indemnity insurance has become a focal protection for most professions in light of increasing litigation in today’s international business arena, and for some businesses is a legal requirement in order to trade, e.g. those regulated by the Financial Services Authority.
Directors’ & Officers’ Liability Insurance
Directors and Officers insurance protects directors and other officers of a company (including the Company Secretary) for their personal liability arising from actual or alleged wrongful acts carried out by reason of their position within the Company. The insurance provides cover for legal expenses, including defence costs and damages.
Material Damage Insurance
This insurance provides protection following a loss of the fixed assets (such as buildings, machinery and stock) of a business by an insured peril. An insured peril is one which gives rise to a loss and includes fire, lightening, explosion, earthquake and theft.
Business Interruption Insurance
This insurance provides protection against loss of revenue or gross profit following loss by an insured peril, which could cause disruption to trading. The usual minimum insured indemnity period is 12 months or the amount of time a business believes it would take to resume full trading.
Crime or Fidelity Guarantee Insurance
This insurance provides cover for financial institutions and commercial organisations against pecuniary loss involving money and other similar property, belonging to the business, or for which they are legally responsible, arising out of theft or fraud, including by the business’s own employees.
© Glencairn Limited, August 2003
Glencairn Limited
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