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What is business insurance?

Business insurance is an umbrella term for different types of insurance policies. It is designed to protect your company against financial risks if you need to make a claim or if one is made against you. This includes legal costs and compensation claims if you’re sued. It may also cover the cost of replacing damaged or lost property.

These policies can cover a range of scenarios, from everyday risks to huge compensation claims. Having the right insurance in place is a good way to protect your work and livelihood, your employees, your customers and your reputation.

Whatever your business needs, our sponsor Superscript can provide a quote. It covers thousands of industries, whether you’re looking for shop insurance, freelancer cover or something else.

What business insurance do I need?

It depends on your business. You may legally be required to take out certain types of business insurance, such as employers’ liability insurance. This is mandatory for businesses with employees in the UK – even if they’re volunteers. It covers compensation claims if your staff are injured or die while in your employment. 

The minimum legal limit of cover is £5 million but most policies include £10 million of cover. You’ll need this insurance even if you only have one employee. The fines for not having employers’ liability insurance can be up to £2,500 per day for every day that you don’t have it.

Some clients might ask for a copy of your public liability insurance certificate before they do business with you. Industry bodies may also require that you have public or product liability insurance in place. 

Before you start in any profession, it’s best to check what cover you need and put the right insurance in place. If you don’t know, check with your professional regulator, professional body or with clients. Discuss the guidelines and requirements before you start work so you’re covered from the outset.

What other commercial insurance should I consider?

Additional business insurance might include: 

These types of insurance aren’t legally required. Equally, clients aren’t likely to demand these insurances before working with you. But extra insurance is a great way of protecting your business.

How much business insurance cover do I need?

The amount of cover you need depends on your situation. The size and type of business you run are important factors, as well as the risk level of your business.  

There’s a balance to be struck. Don’t overestimate how much cover you need and pay more for your business insurance than is necessary. Conversely, if you don’t get enough cover, you could find yourself in trouble if the worst happens and you need to make a claim.

Sometimes your customers, professional body or the law might specify how much business insurance you need. This could be based on factors such as turnover, income, number of employees, the value of a contract and so on.

Think about what kind of things could go wrong in your company and how much it would cost to resolve them. Then consider the legal fees and compensation claims which would follow. Think about what you could stand to lose. For example, how much stock does your business hold? How much would your premises cost to rebuild? Questions like these can help you decide how much cover you need.

Cost will be a critical factor, but it’s not as important as finding the right cover for your business. By tailoring the policy to the unique needs of your business, you’ll have peace of mind that you’re covered, and you may pay less by only paying for the cover you need.

How to get the best deal on business insurance: