What Are the Penalties for Not Having Business Insurance?

By: Justin_Weinger

When you reach the point of perusing the insurance products available for your business, you could understandably feel bewildered by the sheer range of options. There are, indeed, many different forms of business insurance available - and this could give you an increasing sense of dread...

After all, how can you be certain that you are taking out the right insurance policies to prevent being hit with penalties? Here are details of potentially applicable punishments and how to avoid them...

Employers' liability insurance

You could especially fear the prospect of the police one day knocking on your door if you are overly slapdash when trying to insure your business. However, the number of legally necessary insurances in the corporate sphere is lower than you might initially expect.

The insurance which you might need to mostly prioritise sourcing is employers' liability. If you employ at least one member of staff, you almost definitely need this insurance. As a result, its necessity by law comes into play for the majority of UK-based businesses.

Even your part-time and temporary staff wouldn't be exempt from the reach of employers' liability cover, which would help you to compensate staff if they incur an illness or injury as a result of working for you.

UK law would require your business to hold employers' liability cover worth at least £5 million. So, what if it doesn't? You could face fines daily touching £2,500, the website of the Federation of Small Businesses warns. In assessing your company's risks and liabilities, you could even see how taking out employers' liability worth significantly more than £5 million could ease your peace of mind.

Motor insurance

Even before you formed your business, you should have been well aware of the legal importance of vehicle insurance if you were driving on UK roads then. After all, it is not legally permissible to drive either on a road or in another public setting without insurance, the GOV.UK website says.

Your motor insurance needs to reach at least third party level - and be careful not to get behind the wheel of a car simply because it is insured. In this instance, you would still be risking penalties if you, as the driver, are not specifically and properly insured to handle this vehicle.

Those penalties could include a fixed one of £600, while the 6 penalty points added to your license could also make you more reticent on the road. This is assuming that you aren't entirely banned from driving, as can happen if your violation of the law lands you in court.

Falling down this particular pit could also see you responsible for paying an unlimited fine. Your vehicle, too, could be lost if police draw upon their power to seize it and, depending on the particular case, destroy it. Your existing motor insurance might not suffice for averting all of this...

This is because, as the Law on the Web website cautions, many insurance policies would not cover you for commercial journeys. Where exactly is the line drawn between a "personal" and "commercial" journey? An insurance broker could advise you on this matter.

If you aren't certain whether your existing car insurance policy would let you legally make business journeys in your vehicle, ask your insurer for clarification. If the policy doesn't include this coverage but is soon up for renewal, now could be an ideal time to switch to a whole new policy.

The broker Call Wiser could help you with this step - and, if you are considering other insurance relevant to the motor trade, Be Wiser Business Insurance could particularly assist.

By Justin Weinger

© 2018 Copyright Justin Weinger - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.