What is business insurance?

If you have staff — whether part-time, full-time, permanent, temporary or apprentices — you may have a legal obligation to have employers’ liability insurance. Outside of employers’ liability, there’s no legal requirement to have business insurance in the UK.

Business insurance, however, is sometimes a requirement of clients, professional memberships, trade bodies or by regulators. When figuring out if you need to consider insurance for your business, it’s important to know whether you could afford the potential financial loss arising from a claim.

The business insurance you might need will depend on what your business does and the risks it faces.

You can divide covers up into three main groups:

1. People-focused insurance

• Employers’ liability insurance — a legal requirement for most businesses with their own staff — is designed to provide financial cover in case one of your employees is injured at work
• Directors’ and officers’ insurance, also known as management liability insurance, can support entrepreneurs from the risks associated with running a company of any size
• Accident and sickness insurance, an add-on cover, which can pay a benefit for up to 50 weeks if you, or an employee, are signed off by a doctor on long-term sick leave, are hospitalised or injured and unable to work

2. Third-party related insurance

• Public liability insurance, which is designed to cover claims made against you by members of the public for property damage and accidental bodily injury, illness, disease or even death as a result of your work
• Professional indemnity insurance, which may help cover legal costs if a third party accuses you of professional negligence
• Cyber insurance, which is designed to cover any business which operates online or is exposed to the internet, and the risks that come with storing and handling data when running a company

3. Property and equipment cover

• Business contents insurance is built to protect your office contents — like desks, chairs, printers, laptops or monitors — as well as technical machinery, portable equipment, documents and cash from loss, damage or forcible theft
• Tools insurance can cover the cost of replacing or repairing equipment — whether it’s hired or personally owned — helping to reduce the impact of forcible theft or damage
• Landlord insurance can support landlords who are renting commercial or residential properties, including houses of multiple occupancy (HMOs) and student lets, from a range of risks

To read more, check out our in-depth guide on the types of business insurance, including questions to ask yourself to decide which is right for you.

The cost of your business insurance will depend on several factors. For example, the covers you buy and the limit you select for each cover.

The limit of cover is the maximum amount the insurer will pay in the event of a claim. At Superscript, for example, public liability cover comes with the option to choose from a limit of £1 million, £2 million or £5 million of cover.

A final consideration on the cost of business insurance is that business insurance is tax-deductible in the UK. This is because it’s considered a business cost which counts as an “allowable expense”, meaning you can deduct it when calculating your taxable profit.

How much business insurance you need is largely up to you.

That said, certain types of insurance are sometimes a requirement of clients, professional trade bodies, organisations or regulators. For example, if you’re a chartered surveyor, solicitor, architect or tradesperson.

Find out more by reading our article on where to start with business insurance.

It’s best to review your business insurance when something is about to change in your business. For some companies, this can be annually, but for others, lots will change from month to month.

Situations that might prompt you to review your cover include:

• You’ve hired new employees
• You’ve started to offer new services
• You’ve bought new equipment
• You’ve secured a major contract
• You’re applying for more funding

With Superscript, you have the flexibility to pay for your insurance monthly or annually, depending on what works best for your business.

We also offer fee-free policy amendments so you can keep your cover up to date as your business changes during the policy period.