So, you’ve decided to protect your Virtual Assistant business with some professional insurance. Good decision as you will see in this guest blog post from PolicyBee.
Now it’s just a matter of deciding what you need and what you don’t. Isn’t it? That might be easier said than done because the Financial Conduct Authority (FCA) rules say direct insurers can’t give you advice – even about their own insurance.
Most independent brokers have more leeway, however, so you might be better off going to one of those and asking lots of questions. At least then you’ll know you’ll have a) got the right insurance and b) probably saved money.
Here are five questions to get you started
Q1. What insurance do I need?
First, a quick explainer.
Insurance is all about something called ‘risk transfer’. In exchange for a ‘premium’ (the money you pay), your insurer takes the financial hit of something going wrong with your business and you don’t. You just have to make sure your insurer’s covering the right things and you keep paying the premium.
Now, any decent broker should help identify what those ‘right things’ are by asking what you do, where you do it, who you do it with and what you use to do it. This creates your ‘risk profile’, and helps the broker work out what insurance you need – whether you buy it or not is up to you.
To give you an idea, here’s a quick guide to some the types of insurance VAs might need.
Q2. How much cover do I need?
The single biggest question any business has when buying their insurance, and one of the hardest to answer. Every business is different and no insurer or broker can give you an exact figure.
Our usual advice is to buy as much as you can reasonably afford. Yes, it’s a balancing act and every business needs to keep an eye on the outgoings. But scrimping on your cover can be a classic false economy, and it’s better to err on the side of caution than risk being underinsured.
For example, with professional indemnity (PI) insurance, think of your worst-case scenario and how much it’d cost to fix (how much you could be sued for, basically). Don’t forget to consider the legal costs of defending a claim against you – these can run into tens even hundreds of thousands of pounds. As a rough guide, our VA’s PI insurance starts at £8.50 a month for £100,000 of cover.
Here’s a bit more help with working out your PI level of cover.
Q3. Does this insurance cover my past work?
Most types of insurance can’t cover incidents that happen before the policy’s start date. Professional indemnity (PI) insurance, however, can.
This matters because PI claims can take months, even years, to rear their heads. If you’ve been trading for few years but you’ve only just got around to buying your PI, you could still be open to claims from work you’ve already done.
So, ask if your PI insurance includes something called retroactive cover. Effectively, this backdates your policy to cover work you did before your policy started. You choose which date – the month/year you started your business is usually the safest.
Surprisingly, adding this extra cover might not cost anything but it’s best to ask.
Q4. Am I covered abroad?
If you’re planning to travel for your work, or if you have clients abroad, you’ll need to make sure you’re covered. This applies both to the work you do and the equipment you use to do it.
Check the ‘geographical limits’ (where in the world you can work) and the ‘jurisdictional limits’ (what country’s laws apply if you’re sued). Usually, these will state either ‘UK’, ‘EU’ or ‘worldwide’.
Be aware that one set of limits might not apply to all the cover you’re getting. For example, your PI insurance might have ‘EU’ limits but your portable equipment insurance (laptops, phones etc) might only be ‘UK’. For example, go to see a client in Spain and your work’s covered but your laptop isn’t.
Q5. Does this insurance cover other people?
To avoid being liable for others, you need to know exactly who is and isn’t covered by your insurance. The difference between employees, freelancers and the general public means you could need three different types of insurance.
Employees – any UK business with employees legally has to have employers’ liability insurance or face a £2,500 daily fine. An ‘employee’ can be full-time or part-time, temporary or permanent, paid or unpaid – almost anyone, in fact. If you’re not sure you need it, see the HSE’s guide for employers.
If you do have employees, one policy in the business’s name covers everyone – you don’t need to name individuals.
Freelancers & subcontractors – if you need an extra pair of hands and engage a freelancer to help, their work is covered by your PI insurance. If you need someone to do something because it’s outside your area of expertise (for example, getting a chartered accountant to prepare a client’s books), they’re a subcontractor and not covered by your PI insurance. They’re a professional in their own right and should have their own insurance.
If you’re using a subcontractor, make sure they have PI so it’s their insurer paying for their mistakes. Or at least make sure there’s a written agreement between you that states they’ll cover any financial losses you have to pay because they’ve mucked up.
The general public – if you have visitors to your office, or you go out and about, injuries and/or property damage accidently caused by you are covered by public liability insurance.
So there we go. Enough to get you started.
As a general rule, don’t be shy when sorting out your insurance – ask as many questions as you need to. It’s your business you’re protecting, after all.
And if you have any insurance-related questions, we’d love to answer them. Have a look at policybee.co.uk/vact, call a friendly expert on 0345 222 5370 or email [email protected]. As a friend OF vact, they are you a 10% saving off your professional indemnity insurance just mention VACT at time of purchase.
PolicyBee is an independent, digital broker with a knack for covering freelancers, sole traders, small businesses and charities. They specialise in helping people get the insurance they need quickly and easily, and without breaking the bank.