Article by PolicyBee

There are plenty of things to think about when you’re looking for insurance. But should your business’s structure be one of them?

Let’s find out…

Structural Matters

Businesses come in all shapes and sizes: limited companies, partnerships, sole traders, and a few others in between.

Naturally, you want to protect yours from any sort of claim that could put you out of pocket.

A good broker will look at the whole picture. And will say it’s usually more about what you do and how you do it when it comes to advising you about your insurance. Not just the way your business is set up.

Although there are advantages associated with certain organisational structures that can help if it all goes wrong…

Same Difference?

Take sole traders and limited companies. Two different business entities. With obvious differences in how they’re structured, set up, and run.

They have different liabilities too. But the same very real risks to their business if something happens to stop them from trading as normal. Or means they have to pay out compensation.

Two’s (a) company

All it takes is for someone to say you’ve done a bad job or injured them. Or something happening to your equipment, employees, or data.

As a sole trader, you’re the boss. Which means you’ll have to put it right. Even if that means, in certain scenarios (especially without the backup of insurance), using up your savings and investments to cover the legal fees and damages.

Limited businesses, on the other hand, have limited liability (the clue’s in the name). This helps shield their directors’ personal assets. And protects them from total bankruptcy – even if their business goes under in the process.

Steady support

Ultimately, structural differences don’t have a huge role to play when it comes to your insurance. Although directors’ and officers’ insurance is a good pick for limited companies.

However, there’s no guarantee what might happen while your business is out there, doing its thing. So, the tried and tested option is to buy insurance to fit your business’s activities.

To gauge your risks and what type of insurance you need, insurers will want to know things like what you do, your turnover, the value of your most expensive contracts, and how many staff you have.

So, think carefully about any questions they ask. And it’s worth remembering that specialist brokers like us are authorised to advise you on your insurance and can explain everything clearly.

We have insurance advice on our website for sole traders, limited companies, and freelancers covering all types of specialisms. Or you can call us if you’d prefer to talk it over.

Need a broker to take care of your insurance needs? You can get an online quote in just a few clicks.