Self Insurance

Shadowsonthehills

I have never insured anything , but wish to start a small business, and am always looking for money saving ideas so is there a way where you can act as your own insurer?

(egs drawing up a pledge with a solicitor that I can present to potential customers / opening up some form of special savings account)

lisyloo

For legally required insurances, NO you cannot.
e.g. I believe employers have to have liability insurance to cover their employees.
Car drivers have to had 3rd party road insurance.

You can also not avoid insurance required as part of a contract e.g. mortgages usuallly required buildings insurance.

However anything else is up to you.
If you want to self insure then you could set up account for it
e.g. for personal stuff you could have a household account and a motoring account.
But how you manage it is up to you.

If your customers require you to have certain insurance then I would have thought you would need to provide it rather than risk losing business.

What type of insurance are you referring to?

Shadowsonthehills

"What type of insurance are you referring to?"

You know this isthe first time I have looked into it, so I dont know exactly.I suppose one part would be to cover costs if I caused any damage while carrying out my work, which if this did occur i can,t envisage it costing a lot to put right.

Angelpaws_3

Hi! You should consider, as an absolute minimum, Public Liability insurance to cover for that, and Professional Indemnity insurance if your business involves you giving advice or an opinion etc. There are no real legal requirements, but PL ins starts at around £60 for 12 months cover...gotta be worth it for a Money Saver!! (Of course, this will depend on what you are going to do in the course of your business, and could be a lot more if it's dangerous!)

cogito

Why on earth would one of your customers want to trade with someone who doesn't have proper insurance?

vikingaero

It would help to know what line of business the OP proposes to operate in.

Self insurance is only really possible for large companies - most bus companies self insure up to a certain amount but this requires lodging a deposit/bond and after the amount is reached they have normal insurance policies in place to cover the excess.

For a small one-man band it's cheaper to buy insurance.

lisyloo

It would help to know what kind of work you do, but as an exmaple, lets say someone slipped in your office (and you were liable for not clearing up spilt cofee or whatever) and badly damaged their back and couldn't work.
The damages could run into tens of thousands of pounds.
So whilst we don't know what work you do, I think you are under estimating the costs.

My MIL cut her leg on a toolbox left by workmen.
The compensation was £4K and that doesn't include 2 sets of legal fees.
So above £5K for just leaving a tool box in the wrong place.

My gut feeling is that for liability you are best off getting insurance, because the possible payouts can be large.
If you are talking about your boiler or mobile phone, then the MSE way is to self insure (assuming you can afford it).

Debt_Free_Chick

Effectively, you'd have to establish a captive insurance company i.e. set yourself up as an insurance company, with just your own business as your only policy holder.

It's basically not feasible in your situation.

dacouch

I agree with Debt_Free_Chick even setting up a captive insurer in one of the tax haven countries would be very expensive and time consuming so is a non starter. I also believe a business without Public / Product Liability will struggle to win contracts as companies over a certain size and government bodies just will not deal with this.

The other big problem is Employers Liability Insurance is compulsory.

I for one would not want to entrust a business to being covered by funds in a saving account, anyone who deals with Business Insurance would be aware of the types of incidents that can and do happen. Without adequate cover with a decent company this can and does bankrupt many many companies a year.

I assume the OP is an SME and as such they would probably be amazed how cheap a comprehensive package policy would be (Assuming they are not in a high risk trade)

Shadowsonthehills

Its a cleaning business, I used to clean inside public houses years ago and was very efficient at it, but just got more work piled on me.

Cogito...I believe my own insurance would be more "Proper" and trustable than the big companies, one reason for this is that my next door neighbour was high up in insurance on visiting him once and seeing all the expensive goods in his house I said "I betyour are well covered", he laughed and said "Its a con you know."

wheresmydoshat

"Its a con you know."

of course it is, insurance companies make a fortune. look at everyone trying to get in on it, tesco, m&s, greggs (well, not that last one. yet)