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What Insurance Covers Should a Virtual Business Consider?

Gone are the days when a business had to have office premises to trade. The advent of the internet and improvements in telecommunication means that even large organisations can operate in a virtual environment. The use of independent contractors and a range of outsourced service providers has resulted in direct employees no longer being necessary at all. What’s more, businesses are fast realising the benefits of operating virtually – leveraging fast-changing technology to grow their offer, enjoying low overheads and maximising flexibility.

So do companies with either limited or very few tangible assets actually need insurance?

Here are six insurances which I believe a company operating virtually should consider:

• Employer’s liability Insurance – In the UK this is a compulsory insurance for limited liability companies and for a business with any employees (even casual staff). The only exception is a limited company with a single director.

• Public liability Insurance – This type of insurance covers accidental bodily injury or accidental damage to third party property. Although the risk is low there is still a potential exposure. Such as attending a client meeting or trade event.

• Professional indemnity insurance – This covers errors or omissions which could lead to a client suffering a financial loss. For virtual companies in the technology sector or consultancy companies this is probably their greatest exposure to risk.

• Cyber liability insurance – As virtual companies are likely to be heavily dependent on technology, a potential hack could have a detrimental effect on reputation and profit. Cover can be provided for the company’s own losses as well as third party.

• Management liability insurance – This type of insurance protects the management team by providing legal expenses to defend claims against the directors and key employees relating to the operation of the business.

• Key person cover/shareholder protection – Life insurance for the key people within the business is important as the loss of a key individual is likely to have a dramatic effect on profits. Shareholder protection, sometimes known as a company will, is important if there is more than one shareholder.

For more information regarding insurance for virtual companies, contact Tony Gibbs on 0118 916 5485.

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Author: Tony Gibbs | January 11th, 2016

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Tony Gibbs
Get in touch:   Reading: 0118 916 5480   London: 020 7036 8767