The type of small business insurance you need depends on various factors, including the nature of your business, the industry you operate in, the size of your business, and specific risks you may face. Here are some common types of small business insurance that you may need to consider:
Do I need business insurance?
You need business insurance to protect you against the everyday risks that come with your normal business activities. Insurance can cover you against mistakes, accidents, theft, damage and legal fees, but the exact cover you need depends on the business you run and how you run it.
Do I need business insurance if I work from home?
You may need business insurance if you work from home, but what kind of insurance you need will be determined by your particular business.
If you welcome clients onto your premises, then you should consider public liability insurance, in case a client suffers an injury while visiting you.
If you offer advice or a professional service, or if you handle client data or intellectual property, then professional indemnity insurance could be important.
Do I need business insurance for an online business?
Online businesses face unique risks and challenges, and you need insurance that will meet your particular needs.
If you have stock that you sell online, you can protect it against theft and damage with stock cover.
Similarly, if you’d struggle to work without your specialised tools, then tool insurance will keep those covered against theft and damage.
If, on the other hand, you provide an online service rather than physical products, professional indemnity insurance will protect you if a client suffers a financial loss because of your work.
Do I need business insurance as a sole trader?
While you may not need employers’ liability insurance, there are other covers you need to consider.
If you’re a tradesman, you can set up a tailored policy on our tradesman insurance page.
Wondering about your specific trade? You can check out our insurance by industry list to find the cover that’s right for you.
What type of insurance does my business I need?
Think about the kind of work you do and the risks you need to cover: could your business face a compensation claim from a disgruntled client because they believe you’ve been negligent? Is there a chance a member of the public could be injured by your business and claim compensation? Do you have buildings, contents, business equipment, or stock to insure?
- Public liability insurance
Public liability insurance is a key consideration if your business comes into contact with members of the public, whether that’s at your premises or elsewhere. It can protect you against compensation claims for injury or damage made by clients, customers, suppliers, or other third parties. Most shops, restaurants, hairdressers, builders, and tradesmen take out this insurance. Check your client contracts to see if a particular level of public liability insurance is required.
- Professional indemnity insurance
Professional indemnity insurance is important if your business gives advice or offers a professional service to other businesses, or if you deal with client data or intellectual property. If you make a mistake in your work and your client loses money and sues you, your professional indemnity insurance can cover the compensation claims and legal costs. Some professional bodies and regulators require their members to have this insurance, including bodies for surveyors, accountants, and architects.
- Employers’ liability insurance
If your business employs staff, you’re probably legally required to have an employers’ liability insurance policy. This covers compensation claims made by a member of staff because they’ve suffered injury, illness or damage as a result of their work. Certain companies are exempt from the legislation, including some businesses that only employ close family members. To see if you’re exempt, check the Health and Safety Executive (HSE) guidelines or seek advice.
- Business buildings insurance
Whether you work from home or have separate business premises such as a shop, office, or pub, business buildings insurance should be a priority. If you rent the premises, make sure to check with your landlord to see what’s already covered.
- Business contents insurance
You can also protect the contents of your business premises, your business equipment and tools. If these are damaged, destroyed, lost or stolen, this cover will pay the cost of replacements or repairs.
- Stock insurance
If you hold any stock, whether on your premises or in storage, stock insurance will cover the cost of replacing it if it’s damaged, destroyed or stolen.
- Product liability insurance
Product liability insurance protects you should a customer of yours suffer damage as a result of a faulty product you provide. You may be held liable for damage even if you didn’t manufacture the product.
- Personal accident insurance
Personal accident insurance covers serious injury or death caused by an accident. It can pay out for lost income, medical costs and hospitalisation, up to the limit of the policy. The maximum amount is £10,000 for an injury and £20,000 for death.
- Business interruption insurance
If your business is disrupted by material damage caused by an event such as a flood or fire, business interruption insurance provides you with the financial cover you need to get back on your feet. For example, if a fire destroyed the contents of your business premises, business interruption insurance would cover your the consequential loss of revenue, as long as your contents are also insured.
- Business legal protection insurance
Business legal protection insurance – also known as business legal expenses insurance – covers your commercial legal expenses and provides protection against the potential costs of legal action brought by or against your business.
What insurance do I need to start a business?
When setting up your business insurance you should think about what you need to be covered right now, as well as what you might need going forward.
If you don’t have any employees yet then you won’t need to worry about employers’ liability insurance for now, but if you know you’ll be hiring some in the very near future then you might want to consider adding it onto your policy now.
If you’re not sure about how your business might evolve, don’t worry, you can always add more cover at a later date.
To determine the specific insurance coverage your small business needs, consider conducting a risk assessment, consulting with insurance professionals or brokers, and thoroughly understanding the requirements of your industry and local regulations. Tailoring your insurance coverage to the unique risks of your business is crucial for effective risk management.