Do I need business insurance?
Is business insurance required?
You might think business insurance is something you don't need. But if something happened as a result of your work, such as an accidental injury or a lawsuit from a mistake you made, business insurance could protect you, helping to cover the costs of legal fees and compensation.
While not all covers are legally required, it's worth thinking about the potential risks facing your business and whether you could handle the costs if someone made a claim against you. These costs can be hefty – if you're a new business, this could seriously damage your capital.
Some customers, clients and business structures also require you to have business insurance, so you'll need to look into if this applies to you.
Why do you need business insurance?
Every business comes with its own risks – and these are different for every type of business.
If someone made a claim against you as result of your business, this could not only cost you in legal fees, compensation pay-outs or repairing/replacing a damaged or stolen item, but it could cause business interruption and damage your reputation, causing you to potentially lose money and future business.
Business insurance is designed to protect your business from the risks it could face.
You can choose different types of cover based on the risks you have. Our customisable cover lets you change the level and type of cover you need if your circumstances or types of risks change, for instance if you hired employees or added another business activity to your services.
The most common risks include:
- Accidental injury to a member of the public
- Accidental property damage to a member of the public
- Accidental injury to an employee
- Accidental property damage to an employee
- Accidental damage to office, business or specialist equipment
- Theft of office, business or specialist equipment, including cash and documents
- Business interruption as a results of an unexpected event such as fire, flood, burglary or technology breakdown
Business insurance can also cover a wide range of working and business situations – from retail stores and offices to working from home and co-working spaces. So, wherever you work and whichever kind of business you have, you'll be covered.
Is business insurance a legal requirement?
Some types of business insurance, such as employers' liability cover, are legally required for businesses that have employees. If you have employees but no cover, you could be fined thousands for every day that you didn't have insurance.
Other types of cover, such as public liability, are not legally required but may instead be required by a client, business partner or business association in order to work with you. Without business insurance, you may lose out on work.
What insurance do I need for my business?
There are a lot of covers available and some will be more relevant to your business than others.
Our quote builder will guide you through the best options, but here are some common covers and the type of thing you might need them for.
Public and product liability cover
Designed for businesses that come into contact with members of the public or third parties. If someone suffered an accidental injury or property damage as a result of your business or the products that you sell and a claim was made against you, public liability would cover this.
This could include customers, clients, contractors – basically anyone who isn't an employee.
Find out more about public liability insurance.
Employers' liability insurance
This type of cover is legally required in the UK if you employ anyone.
This includes full time, part time and temporary workers. So whether you have a team of 9-5ers or some extra help over the holidays, you'll need employers' liability cover.
Find out more about employers' liability cover.
Business contents insurance
From office equipment and technology to stock and specialist tools, running a business often comes with buying a lot of extra stuff. Business content cover protects your equipment from theft and damage, including cash and documents.
Even if you work from a co-working space or work remotely, our business contents protection will cover this.
Learn more about business contents cover.
Sometimes, the unexpected happens – a flood, a fire, a technological breakdown.
If any event like this happened which meant your business suffered from downtime, this type of cover could provide support through compensation for loss of earnings and the additional costs needed to get your business back up and running.
Read more about business interruption cover.
Professional indemnity cover
Professional indemnity (PI) is best suited to businesses that offer services. That's because it provides protection for the costs a client has lost due to a mistake you've made.
The professional services it covers include designs, advice and consultations.
Find out more about professional indemnity insurance.
This type of cover protects you from the risks associated with using and storing data.
Cyber insurance can cover hacking, cyber attacks, data protection breaches and business interruption for downtime due to a security breach.
Learn more about cyber insurance.
Do I need business insurance if I work from home?
If you run your business from your abode, you might not think you need business insurance. But there are plenty of scenarios where business insurance would come in handy when working from home.
For instance, let's say you invite customers or clients into your home for business and one of them trips over and hurts themselves or you accidentally spill something on their phone. Public liability insurance would still be able to cover you if they made a claim against you.
Or maybe you expensive tech or specialist equipment that you use for your work and someone comes into your home and steals it. Business contents insurance would cover the cost to replace it and compensate you for the downtime you experience.
With this in mind, it's worth considering business insurance if you work from home.
Do I need business insurance if I have a limited company?
There are three reasons why you might need business insurance if you're a limited company:
- You're required by law because you have employees
- Your partner requires you to have it if you have entered into a partnership
- Some clients or customers may only work with you if you have business insurance
Learn more about limited company insurance.
Do I need business insurance if I am a sole trader?
Similar to limited companies, sole traders don't legally need business insurance unless you employ other people.
Many sole traders buy business insurance, not only to protect themselves from the risks of their industry but because many business associations, clients and customers require it.
Read more about sole trader insurance.
Our insurance 101 guides answer more of your questions about whether you need business insurance.