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What is business insurance?
Business insurance can give you financial protection if something goes wrong while you’re carrying out your business activities. It can cover everything from people to premises and typically includes public liability, employers’ liability and professional indemnity insurance. It can also include cover for being sued for compensation, damage to your commercial premises and more.
Small businesses are at risk of hugely damaging financial losses if something goes wrong. The unexpected can happen – a fire, theft, slips, trips, falls– the list could go on. Without business insurance, just one incident could be financially devastating for many small businesses.
Business insurance can be tailored to cover the specific needs of your unique business. Whether you have a team of employees or are a one-person outfit, the right cover can help make sure you and your livelihood are protected.
Is business insurance a legal requirement?
Legal requirements for business insurance can vary, depending on your business set-up and what your business does.
Employers’ liability insurance is a legal requirement if you employ any staff who aren’t direct family members.
Professional indemnity insurance can be required by some regulators and industry bodies, for example, for financial advisers, accountants, solicitors and architects. You may also find that you’re required to have it to work in other occupations including that of personal trainer, contractor, recruiter, private doctor or nurse.
Contracts for your services can require you to have particular types of insurance, like public liability insurance.
You need to understand your obligations and meet them with adequate levels of insurance. It’s always best to check with your regulator and professional body, as well as checking client contracts, to see what their guidelines and requirements are.
Do I need business insurance?
There are many things you might want to protect your business against. For example, a key person leaving or an accident that damages your premises can cause you serious losses. You may also become vulnerable to legal action by employees or clients. No one knows what’s around the corner, so having insurance for your business that could cover you if things go wrong, is worth considering.
What are the different types of business insurance?
There are several types of business insurance cover available. The ones you choose will depend on the specific needs of your business.
The three main types of business insurance are:
- Public liability insurance: Offers you financial protection in case your business activities injure a member of the public or cause property damage. If an incident like this leads to you being taken to court, public liability insurance could cover your legal costs and any compensation you might have to pay. Some customers might insist on public liability cover before they work with you.
- Employers’ liability (EL) insurance: This is a legal requirement if you have even one employee. It can protect you against the cost of compensation claims if one of your staff gets injured or ill working for you. If you don’t have this insurance, you could be fined £2,500 every day you’re not properly insured. Your policy must cover you for at least £5 million. There are some exceptions where you might not need this insurance if you have employees – if they’re a direct family member or if they’re based abroad – but these are very limited. If you have employees who are based abroad, you’ll need to check whether the law in that country requires you to take out insurance.
- Professional indemnity insurance: this isn’t a legal requirement, but you might be asked to have it by other businesses you’re working with. Professional indemnity insurance can give you cover against financial loss if a client claims they’ve lost money because you’ve given them bad advice, or that your work has caused them a problem, and they take legal action against you.
Depending on your type of business, you might also need:
- Commercial buildings and contents insurance: This could protect your business premises and its contents if they're damaged because of flood, theft or fire.
- Landlord insurance: Having landlord cover typically protects you if your rental property is damaged. You can also include protection against loss of earnings due to an insured event, burst pipes for example, as that would mean you can't rent out your property for a period of time.
- Additional cover: You might be able to add additional cover to your policies at extra cost, like business interruption insurance to help you if something prevents you from trading (although this is unlikely to cover claims relating to coronavirus)
- Key person cover: This can protect you from the financial impact if someone essential to your business dies or is diagnosed with an illness listed on the policy.
- Product liability insurance: This could offer you protection against compensation pay-outs and legal costs if someone is injured or their property is damaged by a product you sold them. This is often added as a paid-for extra to public liability insurance.
You can also cover tools, equipment and stock in case they're damaged or destroyed.
You may also want to consider specialist cyber insurance (we don't currently offer this) to protect you from losses caused by damage to your IT systems or loss of information from them. Some cyber insurance policies provide services including IT support and legal help.
What level of business insurance do I need?
This will depend on the size and nature of your business and what you want cover for. Think about the everyday risk involved with the type of work you do, and what you’ll need to be protected against.
Some of your customers might specify a certain level of employers’ liability insurance and public liability insurance before they’ll consider working with you. You’ll need to at least match this.
Some professional bodies set out minimum levels of professional indemnity insurance for their members. These levels can be based on turnover, income, minimum cover amounts and so on. Again, some client contracts will specify the minimum level of cover they need you to have, to work with you. It can also help to think about how much it could cost you to put right a mistake, what you could be sued for in compensation, and legal fees, etc, to estimate how much cover you could need.
Cover levels for other types of business insurance (also known as commercial insurance) will depend on potential losses, for example, the rebuild costs of your premises, and the value of the stock you hold.
Frequently asked questions
Do I need business insurance for an online business?
Just because your business is online doesn’t mean you won’t face risks, or be legally or professionally required to have insurance. If you’re an online retailer, you’ll still have stock to protect. You might have employees which means you must have employers' liability insurance if they’re not members of your immediate family.
You should treat your online business as if it were a business with premises, thinking about all the potential risks and what cover you need for them.
Will business insurance cover me for theft?
It depends on what’s stolen and what insurance cover you have.
- Business equipment insurance could cover you against the theft of laptops stolen from your office or home office, for example.
- Stock insurance could help cover theft of valuable stock as well as accidental damage. It could also cover theft if you run a shop, and even losses caused by dishonest employees.
Can I get business insurance before registering my business?
Yes, you can get business insurance before registering your business, and even before you’ve started trading. When you buy business insurance, you won’t usually be asked for your company registration number or any other business registration details. But you’ll typically be asked about your business address, your trade type, and your actual or projected turnover. You could also be asked about how your business is set up (if you’re a sole trader or a limited company, for example). This means you can sort out your insurance right from the start, so you’re protected without having to register first.
Do I need business insurance if I’m self-employed?
If you employ anyone outside of your direct family, including permanent or temporary staff or contractors, you’ll need employers’ liability insurance.
If you give advice, provide a professional service or handle client data and could potentially be sued for negligence or for making a mistake, you’re likely to need professional indemnity insurance.
If someone could be injured or their property damaged because of your work, you should consider getting public liability insurance.
It’s worth knowing that, as a self-employed person, you’ll most likely be able to claim for all your business insurance as an expense against tax.
Can I add cover for a different trade or profession to my business insurance policy?
It’s not uncommon for businesses to branch out and offer different services. Let’s say, you have a café but also offer an outside catering service. In this case, you’ll need extra cover, which can be included in one policy.
When you start a quote with us, you’ll have the option to add a secondary trade to your policy. If you need to cover a third trade or profession, give our trusted partners Simply Business a call on 0333 016 5956*** for a personalised quote.
If you start offering additional services mid-way through your policy, you’ll need to contact your insurance provider so they can update your cover. Just be aware that the cost of your premium may change.
What should I do if my trade isn’t listed in the search box?
When getting a quote with us, you’ll be able to choose from more than 1,000 options to describe your trade. If you can’t find a close match to your type of work, please give our team a call on 0333 016 5956***.
Lines are operated by our trusted partner, Simply Business. Open Monday, Tuesday, Wednesday and Friday 9am-5.30pm, Thursday 9.30am-5.30pm, Saturday 9am-2pm.
Can I still get business insurance if I’ve had CCJs or IVAs?
If your business has suffered debt problems and you’ve had a County Court Judgement (CCJ) or Individual Voluntary Arrangement (IVA), you may still be able to get business insurance. Each provider looks at CCJs and IVAs differently – it can depend on how strict their rules are. You might have fewer options and may need to find a broker who specialises in business insurance if you have bad debts or bankruptcy issues.
Will changing from sole trader to limited company affect my business insurance policy?
Yes, the legal structure of your business will change, so you’ll need to contact your insurance provider. They’ll most likely cancel your existing policy and replace it with a new one that covers your change of company status. The price of your premium might also change.
If your business is expanding and you start to employ people who aren’t direct family, you’ll also be legally required to take out employers’ liability insurance, so this would need to be included in your new policy.
How do I compare quotes for business insurance?
Whatever type of business you run, it’s easy to compare quotes with Compare the Market. Just give us a few details about you and your business.
How much does business insurance cost?
Cost is typically based on the size and type of your business, as well as the size of the potential pay-out you might want. Things that will affect the cost include:
- Type of business – do you own a business in a high-risk field? Investment, property and finance businesses may face greater risks and could need higher levels of cover.
- Level of cover – do you want to insure your company building or stock for a large amount? The higher you’d like your pay-out to be, the more you’ll be expected to pay in premiums.
- Level of excess – the level of excess you’re willing to pay will be a factor in determining your premiums. There’s always a compulsory excess you have to pay. By choosing a higher voluntary excess on top of that, your premium is likely to be cheaper, but you’ll need to pay more when making a claim.
- Size of business – if you’re manufacturing lots of products, dealing with large contracts, have a high turnover or are responsible for lots of employees, you may find that premiums are more expensive.
What do I need to get a quote for business insurance?
Once you’re ready to compare business insurance quotes, we’ll need a few details about you and your business.
As well as your type of business, the business name and its address and postcode, you’ll also need to provide:
- your business’s legal status eg: sole trader/partnership/limited company
- how long you’ve been trading
- forecasted turnover for the next 12 months
- number of employees and how many do solely clerical work
- whether you operate in high-risk environments
- if you have other business premises
- any claims history
- what cover options you want and when you want your policy to start
Why use Compare the Market?
See quotes from a range of specialist providers
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Option to call for expert help from our trusted partners at Simply Business on 0333 016 5956***
^^On average, it can take less than 6 minutes to complete a business insurance quote through Compare the Market, based on data in November 2020.
***Lines are operated by our trusted partner, Simply Business. Open Monday, Tuesday, Wednesday and Friday 9am-5.30pm, Thursday 9.30am-5.30pm, Saturday 9am-2pm.
Business insurance expert
What our expert says
"With the amount of time and hard work you put into your business, and with it generating an income for you, it makes sense to ensure you have cover to protect you when things go wrong, or accidents happen. Business insurance can cover you for all kinds of risks, so make sure you’ve got the right protection to suit your business’s size and type of company."