Everything you wanted to know about business insurance

Understanding the different types of insurance available for business can be difficult. In this article, we help get you up to speed.

• Why business insurance should be a top priority for the newly self-employed?
• Why public liability insurance is an important cover for businesses
• Intellectual property law for small businesses in the UK
• What does business insurance cover?

Do I need business insurance?

Running a business comes with everyday risks. If any of the potential pitfalls came to pass, your business could be seriously harmed.

Having business insurance in place helps to minimise those risks, making sure you can carry on trading should anything happen.

Take one example. If you have a business premises and welcome in members of the public, there’s a chance someone might have an accident when visiting – and then blame you.

If that did happen, a claim against you could be costly. Instead of having to deal with settling the claim yourself, public liability insurance can cover it, meaning you’d only need to pay the excess.

Public liability insurance is just one cover out of many you can choose for your business. You should be able to tailor your insurance to your business, adding covers depending on your needs.

Is it a legal requirement?

If you have staff, it’s likely that employers’ liability insurance will be a legal requirement – this is the only type of business insurance mandatory under UK law.

That being said, some trade and regulatory bodies may require you to have business insurance. A good example of this is the Institute of Chartered Accountants in England and Wales, who make it compulsory for practising members to have professional indemnity insurance in place.

What’s more, some clients may ask that you have the right insurance in place before they work with you.

Types of insurance available for business

Accidents, mistakes, theft – business insurance can protect against all kinds of eventualities. These are some of the key types of insurance available in the market:

• Public liability insurance
• Employers’ liability insurance
• Professional indemnity insurance
• Product liability insurance
• Business contents insurance

Public liability insurance

We’ve mentioned public liability insurance already but it’s worth running over again, as it’s an important cover for lots of businesses.

Not only can it cover you if you run a business that people visit, it’s also there for businesses that visit clients – like cleaning firms working at someone’s house.

It can cover you if someone has an accident or suffers a loss and blames your business. Using the example of a cleaning business, public liability insurance can cover a claim if the client’s carpet was damaged after using the wrong type of product.

Employers’ liability insurance

This is usually a legal requirement for businesses that have employees, even short-term staff, casual workers, and contractors. If you do need employers’ liability, you could be fined £2,500 for every day you don’t have it.

Employers’ liability can cover you for claims made by employees who’ve been injured or become ill as a result of working for you.

It also means that you’d be covered if your employees make a mistake that would be covered by public liability insurance if you were to do it – like the damaged carpet example from above. Public liability only covers you, not your employees.

It’s important to make sure you’re following all the health and safety practices and regulations for your industry, plus that you carry out regular risk assessments.

Professional indemnity insurance

This is an important type of business insurance for businesses that give advice or a professional service.

It can cover you if you make a mistake in your work that leads to a financial or professional loss for your clients.

It’s also for situations like unintentional copyright infringement, unintentional breach of confidentiality, loss of documents, and defamation or libel claims.

Product liability insurance

If you design, manufacture, or sell products (or even give them away for free), you could be liable for accidents and injuries that result from them being faulty.

Product liability insurance can cover these claims – it’s important to keep in mind you might be held responsible even if you didn’t make the product.

Business contents insurance

If you keep important business equipment on your premises and it was lost, stolen, or damaged, would you be able to carry on trading?

Business contents insurance should be able to help you out in that situation, helping you get back on your feet quickly. It can even cover your business furnishings, and cover you if you run your business from home.

Other small business insurance options

There’s lots of other covers available, including stock insurance, personal accident insurance, and business interruption insurance. It’s worth taking your time to work out which covers you might need – our business insurance FAQs have more information.

How much does business insurance cost per year?

This depends on a few things, so it’s not easy to give an estimate. The best way to find out how much it might cost is to get a quick quote online – all you need to do is enter some details about you and your business. You’ll have your quote in minutes.

Is there anything else you’d like to know about business insurance? Let us know in the comments below.