Sunday, July 11, 2010

Start up Sunday Week 6 - Insurance & Legislation

Welcome to Week 6 of our Start Up Sunday series - today we will touch on Insurance and Legislation.

Smart business people work to reduce the risks to their businesses from outside forces. One of the best ways to do this is by having in place the relevant insurances. Depending on your type of business and how you trade, you will be required by law to take out certain types of insurance. Other types of insurance are not compulsory but may be appropriate for you and your business.

Employers Liability Insurance - If you have employees, this insurance is a legal requirement. It provides cover for claims by employees who are injured or become ill as a result of their employment.

Vehicle Insurance - You need to insure your car or van for business use if you will be using it for business purposes.  Some insurance companies don't carry business car insurance so please ensure that your insurance company does. 

Public Liability Insurance - This provides cover against claims made by members of the public who have been injured or has property damaged as a result of carelessness at work by you or your employees.

Premises Insurance - Insurance will be required for the premises you work from, even if you work at home and there is already a domestic policy in place. This is because residential insurance policies usually only cover domestic use. Please contact your own insurer for clarification of your own policy.

Contents, Stock and Materials Insurance - This will be required to cover the replacement costs of contents, stock and materials even if you work from home and have a home contents policy.

Illness, Accident and Life Cover - These will pay a regular income or lump sum if you are unable to work as a result of illness or accident or if you die.

Insurance policies serve to protect you and your business against the unknown and it's vital that you anticipate any risks in your business and protect yourself against these.

All companies will be covered by some level of legislation - and some more than others.  Legislation deals with areas such as protection of employees, the length of time worked in a day/week, product legislation, health & safety legislation to name but a few. 

As business person, it is incumbent upon you to ensure that you and your company are fully compliant with the various pieces of legislation that apply to your area of work. 

As an example, those who wish to start a business selling bath & body products have a raft of EU legislation to adhere to.  You might think that making soap or body butters or lip balms would be an easy, fun job and that you could just make them and sell them.  However, there is EU legislation that all sellers/producers have to comply with - these will involve ensuring that you list all ingredients in the order of percentage used, that you include a batch number for each batch made, you list your name and address so that any customer can contact you directly if they have an issue with your product and you have to include a best before date. 

For this industry, the legislation also insists that you, as a producer, are certified as safe to make the products. You must be certified by a qualified cosmetic chemist and keep full files on every single thing you produce, including a copy of your safety assessment.  For each ingredient you use, you need to have these included on your safety assessment and these can, at times, only be used at certain concentrations - for example, if you use citrus based essential oils, you can use these at 1% maximum.  For more information on cosmetic legislation, click this link.

If you wish to sell your products online, then you must ensure you comply to Distance Selling Legislation.  If customers place orders with you online or on the phone, then this is termed distance selling.  You still will have a contract with customer, whether there's a written contract or not. If you offer something for sale at a particular price, and the customer agrees to that offer and pays you for, then you automatically have a contract with them. 

You must provide information to your customers prior to sale, to inform them of their rights - this information includes:
  • You must identify yourself at the seller, giving a name and address where you can be contacted
  • The characteristics of the goods or services you are providing
  • The price to be paid, including any taxes
  • The cost of delivery to each of the countries you are willing to supply
  • The arrangements for payment - how you will accept payment
  • The existence of the right to cancel the order
  • A note about the cost of communication - for example, if you have a premium phone number, your customer must be informed of this PRIOR to them making the call
  • The period of time for the offer
  • The minimum duration of the contract
Your customers are also entitled to:
  • Written confirmation of their orders
  • Written information on how to cancel the order
  • Your business address so that they can direct any complaints to you (this must be an actual address, not just your website link or email address)
  • Details of any guarantees or after-sales services
  • Details of how and when to end a contract
A well written set of Terms & Conditions on your website will ensure you abide by these regulations.  If you require any further information about Distance Selling Regulations, please this link.

We don't have enough time or space here to cover the full raft of legislation that will apply to each and every company, but please ensure that you, as a competent business owner, make yourself familiar with the legislation that is applicable to your specific industry as well as general legislation that covers issues such as Health & Safety and labour, to name but a few.

The key point to take away from this post is that you need to make yourself aware of what is required of you as a business owner.  A good business person will have researched all regulations related to their business and worked this into their business plan, especially if there are additional costs involved in you having to comply with these laws.

I hope this quick look at required legislation and insurance assists with your business - the two words to take away from this are "research" and "comply" ... you won't go wrong if you abide by those words!

Remember to check out our next article in the series, which will be published next Sunday.  And don't forget to join our forum at


  1. Another really useful post, Thanks. Worth remembering that in the eyes of the law ignorance is not a defence, so it really pays to research your chosen field and ensure you are up to date with all the legislation.

  2. Excellent, well written and really helpful post, as always. Glad we have someone to keep us on the right track !