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What types of insurance should you consider whilst running a business?

Posted by Todd Davison on May 19, 2021 11:09:43 AM

When it comes to business insurance, owners are typically well informed with products such as employers' liability insurance, public liability insurance and business interruption insurance. But if you have ambitions to grow your business, there are other types of insurance which should be in your thinking.

Many business owners will be carrying out an insurance review over the coming weeks and months, having taken the decision to cancel policies in response to the pandemic.

More than half (51%) of companies said they had stopped paying for a range of insurance policies to keep their business afloat, according to a survey of more than 150 SMEs in the UK by Premium Credit.

However, with a post-pandemic recovery in mind, firms are expected to switch-up their risk mindset once again, in order to make back the losses of the past 18 months. Protecting against these risks will be crucial – so, what type of insurance should be on a business’ radar?

Credit insurance

Credit Insurance helps protect your business against credit risks such as the insolvency of your customers. Used by businesses of all sizes, credit insurance means you won’t lose out financially should your customers not be able to pay you.

This product is often seen as crucial when attempting to grow a business, as it provides some assurance when extending credit to new customers, while improving access to funding.

You can buy credit insurance for your entire portfolio of customers, or for individual accounts. This flexibility means that you only have to pay to cover what you perceive to be your greatest credit risks.

As we enter an uncertain economic period in the UK, there’s no telling which of your customers will be good to their word.

Business loan insurance

Borrowing hit record levels in 2020 with almost half of the UK’s small and medium-sized businesses seeking out financial support, compared to just 13% in 2019.

While this came as little surprise given the measures required to keep pandemic-hit businesses afloat, firms must now ensure they do everything they can to protect themselves from defaulting on those loans.

Business loan insurance will provide funds to repay a loan, commercial mortgage, or a director’s loan if one of the business owners dies or suffers a critical illness.

If a claim is made, the proceeds are paid to the policy owner, who can then decide to pay off the loan in full or to continue repayments according to the initial agreement. Without this protection, most small businesses would struggle to cover the cost of a business loan at such short notice.

Personal guarantee insurance

Signing a personal guarantee means that if your business becomes unable to repay a debt to the lender, you’re personally responsible, and your personal assets will potentially be on the line.

Personal guarantee insurance provides business directors with cover in the event the lender calls on their personal guarantee following a financial shortfall at the company.

With personal guarantee insurance, you can cover up 80% of your risk, so you’re personally protected as you plan the future funding and growth of your business.

For many business owners, knowing they are protected provides them with the security and incentive to pursue growth opportunities that they might not otherwise take.

There will be winners and losers in the post-pandemic economy – make sure you’re covered whichever way the wind should blow.


Purbeck Insurance is a specialist Personal Guarantee Insurance underwriter, authorised and regulated by the Financial Conduct Authority. We work alongside lenders and brokers to provide a bespoke insurance solution based on the lender’s individual requirements and risk profile. Please contact one of our specialists today to learn more on 0208 004 7250.

Topics: #pgi, #personalguaranteeinsurance, Insurance

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