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Compare prices from 16 leading business insurance providers[1], including:
[1] Correct as of June 2023.
What is business insurance and why do I need it?
Business insurance can give you financial protection if something goes wrong while you’re carrying out business-related activities.
It can be tailored to cover your specific business needs. Whether you’re a cleaner, hairdresser or work in construction, have a team of employees or are a one-person outfit, the right cover can help make sure you and your livelihood are protected.
The three main types of business liability insurance are:
Public liability
insurance
Offers you financial protection in case your business activities injure a member of the public or damage their property. Some customers might insist on public liability cover before they work with you.
Employers’ liability
insurance
Employers’ liability cover is a legal requirement if you have any staff. It can protect you against the cost of compensation claims if one of your staff is injured or becomes ill working for you.
Professional indemnity
insurance
Covers you 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.
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. For example, if you have staff, you’ll probably need at least £5 million of cover for employers’ liability insurance, but you may want to opt for £10 million as standard.
Some customers and professional bodies might require minimum levels of cover before they’ll work with you or allow you to become a member, so you’ll need to at least match this.
To find the right type of commercial insurance for your business, you should consider whether you:
- deal with members of the public
- are a sole trader or an employer
- have business premises
- use a vehicle for your work
- have stock or work tools and equipment
- offer a product, trade, or a service
- need business-interruption insurance.
Small business insurance
If you run a smaller business, your needs are probably going to be different from those of a multi-national company. Fortunately, small business owners can find cover that’s geared towards them. A small business is defined by the government as employing fewer than 50 people and having a turnover of under £10.2 million.
Many insurance providers offer business insurance packages aimed at particular types of small business. These include:
When you get business insurance quotes, you’ll be asked questions about the size of your business and what you want covered. Whatever business you have, you’ll need employers’ liability cover if you have any employees.
From construction sites to cocktail bars, and finance to food, you can find insurance that’s specially designed for more than 1,000 types of 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.
What can affect the cost?
- 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’s 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 – you’ll always have to pay a compulsory excess, but by choosing a higher voluntary excess on top of that, your premium is likely to be cheaper. Be aware that you’ll need to pay more when making a claim though.
- Size of business – if you’re manufacturing high volumes of products, dealing with large contracts, have a high turnover or are responsible for lots of employees, you may find that your premiums are more expensive.
What other types of business insurance are there?
There are many different types of business insurance to be aware of. Depending on your type of business, you might want to consider:
Product liability insurance
Offers 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.
Commercial buildings and contents insurance
Commercial property insurance could protect your business premises and its contents if they’re damaged because of flood, theft or fire.
Landlord insurance
Typically protects you if your rental property is damaged. You can also include protection against loss of earnings due to an incident you’re insured for: burst pipes, for example.
Business interruption insurance
Offers protection if something prevents you from trading (although it’s unlikely to cover claims relating to coronavirus).
Key person cover
Also known as key man insurance, this can protect you from financial impact if someone essential to your business dies or is diagnosed with an illness listed in the policy.
Tool cover
You can also cover tools, equipment and stock in case they’re damaged or destroyed.
Cyber insurance
This can protect you from losses caused by damage to your IT systems or loss of information from them.
You can’t currently compare cyber risk insurance with Compare the Market.
Business car or business van insurance
If you own vehicles that you use for your business, you’ll also need to have business car or business van insurance.
The advantages and disadvantages of additional business insurance
Because every business is different, business insurance can be made up of various add-ons to suit your individual needs. For example, a hairdresser would need different cover to a financial advisor. Add-ons have advantages and disadvantages.
Advantages:
- Flexibility – you can choose the additional cover you need for your particular trade or profession, as well as any insurance that’s legally required. This gives you the flexibility to build the right package for your set-up.
- Peace of mind – protecting your business from a range of unforeseen circumstances gives you reassurance that you won’t be hit with an expensive bill if things go wrong.
- Credibility – business insurance shows potential clients and customers you’re a safe pair of hands. If anything goes wrong with the work you do for them, you have a way of compensating them.
Disadvantages:
- Cost – adding lots of extra cover to your policy can be expensive. If you’re a smaller company, make sure you prioritise key parts of your business.
- Potential overlaps – business owners can sometimes be covered for the same risks twice. This means you might end up paying more than you need to and it could cause complications if you have to make a claim.
Compare business insurance quotes now to see if you could save
How to reduce the cost of your business insurance
There are several ways you can cut the cost of your business insurance, including:
- Lower your risk – by installing a security camera or giving all your employees health and safety training, for example.
- Show that the business is well run – insurance providers like businesses that have a solid track record of being well managed. It’s important to show evidence of this through risk assessments, quality-control procedures, financial accounts, professional accreditations and employee training.
- Bundle your insurance together – many insurance providers will let you combine your essential business cover into one policy. This can be more cost-effective than taking out separate insurance products.
- Don’t renew automatically – shop around for a great deal on your business insurance when your policy is up for renewal. You can compare business insurance quotes online with Compare the Market.
What our expert says...
“Getting the right business insurance is vital to protecting you, your staff and your company. Your business insurance policy can be tailor made to suit your business’ size, sector and its potential risks. Some types of business insurance are a legal or regulatory requirement, so it’s important you’re aware of the types of cover you need and which are your preference.
Whether you’re a one-person operation, a large office or a hands-on manufacturer, there’s protection for all the risks your business faces.”
- Anna McEntee, Insurance expert
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What do I need to get a quote for business insurance?
As well as telling us your type of business, the business name and its address, you’ll also need to provide:
- The legal status of your business. For example, sole trader/partnership/limited company
- How long you’ve been trading
- Turnover over for the past 12 months
- Number of employees and how many do solely clerical work
- Whether you operate in high-risk environments
- Any claims history
- What cover options you want and when you want your policy to start.
Frequently asked questions
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.
Do I need business insurance for an online business?
Online businesses also face risks, and can 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.
Does business insurance cover 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, for example.
- Stock insurance could help cover the theft of valuable stock, as well as accidental damage. It could also cover losses caused by dishonest employees.
When should I get business insurance?
As with most types of insurance, the sooner the better. You can even get insurance before you start trading. If your business needs a trade licence – you might be running a pet shop, a pub or a taxi service – you can sort out your insurance before you get your licence.
For example, you may need insurance for your premises as soon as you exchange on the property, but your licence hasn’t yet been granted. If you start trading without the right licences your insurance will be invalid – as it will be a requirement of the insurance that all necessary licences will be in place – and any claim could be denied.
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 your business address, your trade type and your actual or projected turnover. You could also be asked how your business is set up (whether you’re a sole trader or a limited company, for example).
Is business insurance tax-deductible?
HM Revenue & Customs (HMRC) generally sees business insurance as a business cost and therefore an allowable expense where the premiums are paid wholly and exclusively for your business. And, where an insurance premium is deductible from trading profits, any associated insurance premium tax is also an allowable deduction.
However, like all things tax-related, there are exceptions, so you’ll need to check whether the premium and any insurance tax on the premium is deductible for each policy you take out. If you’re not sure, ask HMRC or your accountant or tax advisor. Keep your receipts and policy documents safe and make sure any claimable insurance costs are included in your tax return.
Do I need business insurance if I’m self-employed?
If you’re self-employed, you’ll need business insurance if:
- You employ anyone outside of your direct family, including permanent or temporary staff.
- You give advice, provide a professional service or handle client data and could potentially be sued for negligence or for making a mistake.
- Someone could be injured or suffer property damage because of your work.
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 to my business insurance policy?
When you start a quote with us, you’ll have the option to add a secondary trade to your policy. 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 or need to cover a third trade or profession, give our trusted partners Simply Business a call on 0333 016 5956 for a personalised quote.
Lines are operated by our trusted partner Simply Business and are open Monday, Tuesday, Wednesday and Friday 9am-5.30pm, Thursday 9.30am-5.30pm and 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. But 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.
Is business insurance a legal requirement?
Legal requirements for business insurance can vary, depending on your business set-up.
Employers’ liability insurance is a legal requirement if you have any staff.
Professional indemnity insurance can be required by some regulators and industry bodies; for example, for financial advisors and solicitors. You may also find that you need it to work in other occupations, including as a personal trainer, 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.