Every week we get a flurry of questions from bemused business owners who want to protect themselves from potentially prickly insurance claims.
If you can relate to this feeling of general insurance-induced confusion, don't worry. Here are six of the best head-scratchers we've had this week.
And, helpfully, their answers.
1. Do I need liability insurance for my limited company?
Many people see the words 'liability insurance' and think it's related to them being a limited company. That's because the 'limited' nature of a limited company refers to the liability of its members: their liability is limited to what they've invested in the company.
This makes no difference to your insurance. A limited company is simply one type of business structure. There are many other types of business structure and your insurer doesn't really mind which one you are.
2. Is my business insurance exempt from VAT?
No. But only because VAT doesn’t apply to insurance. There’s insurance premium tax (IPT) instead, charged at 12% and included in all our quotes.
And, sorry, but you can't claim IPT back from HMRC.
3. Can a director of a closed limited company be sued?
The claim against your company would be closed, but a claim could be made against you as a director of the company. That happens because disgruntled people always want someone to blame.
Your company might've been limited but, as its director, your personal liability is unlimited. Luckily, there's directors' and officers insurance to protect yourself against that.
4. Do I still need my professional indemnity insurance if I'm not working?
Almost certainly yes.
In other words, cancel your insurance and you're not covered.
Some insurers offer a type of 'hibernation' cover: you're not covered for any new work, but you're still covered for past work. You pay less too. Ask us about this if you think it might be what you need.
If you've totally given up trading but still want your past work covered, you might want to look at run-off cover.
5. Will I be charged if I cancel or change my business insurance policy?
If you're lucky enough to be one of our customers then no, you won't. Many insurers and brokers do charge for amendments, though, and you'll have to ask them how much.
You might want to ask them why they charge, too.
6. Why do you ask me so many questions about my business? Surely you can't need that much detail?
We know it's a pain but, sometimes, yes, we do need that much detail about your business.
The more information we have, the better we'll understand what you do and how risky it is. Getting the right cover is the most important thing, despite what price comparison websites might tell you.
We've cut out as many questions as we can manage, for both your sake and ours. But sometimes you just have to bite the bullet and get on with it.
We hope that's cleared up a few of your insurance-based queries for the minute. If you have any other questions about professional insurance, feel free to give us a call on 0345 222 5391.
Image used under license from Shutterstock.