How much business insurance will I need?

Your business is your livelihood, so you need to protect it. And getting enough insurance to protect your business is essential. But you also need to make sure you don’t spend more than necessary or buy insurance you don’t need. We explain what you need to know to make sure you have the right cover.

What’s the minimum business insurance cover I need?

Employers’ liability insurance is the only type of business cover you must have by law, but that’s only if you have employees.

This helps to pay compensation if an employee becomes ill or injured through working for you. You must have at least £5 million employers’ liability cover from an insurer that the Financial Conduct Authority has authorised. 

For some professions, you may need professional indemnity insurance (PII). Solicitors, for example, cannot take on work without this insurance. PII protects you in cases where you provide poor advice or a service that causes your client to suffer financial loss. Even if you’re not required to have PII to practise your profession, some clients or suppliers won’t work with you unless you have it. 

The same is true of public liability insurance. Public liability insurance helps pay for compensation and legal costs if you injure a member of the public or damage their property through your work. This cover includes incidents at your business premises, client homes or elsewhere. It’s worth taking out if you have any contact with the public in your business, even if companies you work with don’t insist on it.

Read more: 

• What is employers’ liability insurance?

• What is professional indemnity insurance?

• What is public liability insurance?

What insurance does my business need?

The type of insurance your business needs depends on the nature of your work. Here are some types of cover you may need to consider:

• Business contents cover insures the contents of your business premises against theft or damage from an unforeseen event, such as a fire or flood.

• Directors and officers’ liability insurance (D&O) protects individuals in your business who have management responsibility.

• Cyber liability insurance helps cover financial losses if cybercriminals damage or steal electronic data.

• Business interruption insurance protects you against loss of income if you can’t operate due to events beyond your control, such as a fire at your premises. 

How can I protect my business from claims?

Business insurance can protect you from the cost of a claim, but it’s better to avoid anyone claiming in the first place. Here’s how: 

• Do a risk assessment of your business premises to make sure they’re safe for employees and members of the public

• Review the quality and safety of your work regularly

• Train employees well

• Get legal advice on contracts

What happens if I don’t have enough cover?

Without insurance in place, you won’t be covered financially if something went wrong.

In other words? Not having the right types of business insurance or high enough cover limits can be catastrophic. The cost of a claim or an incident that damages your premises or its contents could destroy your business. You also need to consider the damage to your business’s reputation and the loss of income you might suffer if you can’t trade.