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What is commercial insurance?

What is commercial insurance?

Running your own business and being your own boss can be deeply satisfying and rewarding. But it also brings its own set of responsibilities and challenges.

One of these is deciding on which type of commercial insurance you need.

Whatever type of business you’re in, you’ll need to ensure it’s protected, and any risks are covered by the right policy.

Emily Kindness
From the Business team
minute read
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Posted 27 NOVEMBER 2019

What is commercial insurance?

Commercial insurance is a general term that covers lots of different types of insurance, such as public liability insurance, employers’ liability insurance and professional indemnity insurance. These types of insurance policies protect you and your business against claims resulting from losses, injury and even death. It can insure you against claims made by employees, customers and members of the public.

Commercial insurance policies can comprise a package of various types of cover under one policy. Depending on what you do and where your business is based, these can be tailored to suit your business needs.

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

What are the different types of commercial insurance?

Different types of commercial insurance cover include:

Public liability insurance

Public liability insurance can cover you for any claims made against you in which a customer, client or member of the public is injured (or even killed), or their property damaged as a result of your work.

Most public liability policies will also cover incidents that happen on your business premises or off-site.  

Be aware that public liability policies are only valid for incidents that are unexpected and accidental.

Public liability insurance does not cover your employees. For them you will need:

Employers’ liability insurance

If you employ anyone who is not a direct family member, even just one person, you’ll need to have employers’ liability insurance.

It covers you for any claims made by an employee who has suffered injury or illness as a result of working for you.  

Employers’ liability is mandatory by law. If you don’t have it, you could face fines of up to £2,500 for every day you’re not insured.  

What other types of commercial insurance should I consider?

Depending on your type of business and where you are based, you may also want to consider:

Commercial property insurance

A commercial property insurance policy can include:

  • Buildings insurance – covers the repair or rebuild of a business premises for events such as fire and flooding. Circumstances you’re insured for may differ between different insurance providers, so it’s important to check each policy.
  • Contents insurance – covers business contents such as goods, stock and equipment. You’ll need to judge your stocks’ value based on the cost price rather than the sale price. If the amount of stock you hold varies, you’ll need to keep your policy updated to ensure everything’s covered. Be aware though that insurance providers may charge an admin fee to make amendments to policies.
  • Fixtures and fittings insurance – if you have items that don’t belong to the building, but aren’t stock either, you can choose to add them to your buildings insurance.
  • Loss of rent insurance – covers your rent for void periods between tenancies if you rent out a commercial property to tenants.

Motor insurance

If you own any vehicles in relation to your business, third party cover is mandatory by law. If your employees use their own vehicles to work for you, they are responsible for the insurance, but you as an employer must ensure they have the legal minimum.

Tool and equipment cover

If you’re a tradesperson, such as a carpenter or an electrician, you may want to consider protecting your work tools and equipment from damage, loss or theft as part of your business insurance policy.

Professional indemnity insurance

If you offer a service based on knowledge, skills and advice such as a solicitor, accountant or architect, you may need professional indemnity insurance to become a member of a professional body in your chosen industry.

Professional indemnity insurance can cover the costs of a claim by a client who has suffered damage to their reputation or lost money, as a result of your service.

Compare commercial insurance

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Compare business insurance quotes with us, and start protecting your business today.

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