What business insurance do I need?

Chris Andreou

April 21, 2021

what business insurance do i need guide

Free Download: Business Insurance Guide

Download Now ↓
Contractors

What is business insurance?

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you’re a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business—and to get them covered. 

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you’ll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

Why do I need business insurance?

Although employers liability insurance is the only mandatory cover (applying to businesses with employees only), for many businesses, insurance is a necessity for two key reasons.

Firstly, most businesses would be unable to afford the cost of a claim.

Secondly, you may find that other businesses or stakeholders (investors, for example) that you interact with require that you have a certain level of business insurance as a prerequisite to working together.

What types of business insurance are there?

This is not an exhaustive list of the types of business insurance products out there, but covers the products you're most likely to want to consider.

Professional indemnity insurance

Professional indemnity insurance covers risks in association with your professional services. It’s a must-have for many businesses.

This is because the majority of businesses do at least one of the following: provide a professional service, handle client data, or work with intellectual property. It’s not a legal requirement, but many clients will insist on your having it as a prerequisite to working with you - and in certain professions, you may find that your regulatory body requires it. 

Public and product liability insurance

Public liability insurance, which often includes product liability insurance as a package, covers your interactions with third parties (by this definition, anyone who isn’t your employee).

It’s a fairly common and straightforward cover; if your business causes an injury or property damage to a member of the public, public liability insurance will cover you for the resulting legal and compensation costs.

Product liability follows the same concept, but for any products you sell or give clients (whether you’re the supplier, manufacturer or retailer).

It’s worth noting that even if your business typically doesn’t interact with the public, if you exhibit or trade at events or fairs, the organiser will typically require that you have your own public liability policy in place. 

Business contents insurance

Much like home contents cover, business contents insurance covers your stock, equipment and furniture.

It will often include some level of portable equipment cover, for things like laptops and mobile phones, which are often with you when you’re on the move.

Employers liability insurance  

Employers liability insurance is the only business insurance required by law (for businesses with one or more employees) and is designed to cover workplace injury or property damage claims made by employees.

Some companies may be exempt, such as businesses that only employ immediate family members.

It’s worth checking on this, as not being appropriately covered could incur a fine of up to £2,500 per day for each day that you’ve not been insured! Note that you may also be fined £1,000 if you do not display your employers liability certificate, or fail to show it to inspectors.

Cyber insurance

Cyber insurance is all about protecting risks exposed by your data and computer systems. It’s been embraced by larger, more technologically focused businesses, but is fairly underappreciated in general.

In reality, it’s a cover to consider for any business that collects, stores, or processes information - and certainly one to think about if you’re a digital-first business, such as an online retailer.

With cyber risks being some of the most challenging to protect yourself against, you may decide that getting cyber insurance is a small price to pay for the peace of mind and assurance that if you do experience a data breach or cyber-attack, you’ll have expert support at hand.  

Management liability insurance

Also commonly known as D&O insurance (short for directors and officers insurance), this cover is relevant to you, unless you’re a sole trader.

It’s often misunderstood that personal liability claims are covered under professional indemnity or general liability policies - yet this is rarely the case. D&O cover is the only type of policy which specifically protects those in management positions against allegations of mismanagement.

Business Insurance Guide

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Business Insurance Guide

How do I choose a business insurance policy?

Choosing a business insurance policy is actually fairly straightforward, once you’ve understood your set of risks and determined what you need covered.

Superscript has created a guide to business insurance which includes questions to ask yourself when thinking about which covers you need.

In a more general sense, some good steps to take when choosing financial products are:

  • Check reviews. You’ll usually be able to find these on a selection of the following: Facebook, Feefo, Google and Trustpilot. 
  • Check that customer support is available in a way that works for you. If you aren’t able to make phone calls during working hours, for example, you’ll need a provider which offers support by email or live chat. 
  • Check regulatory ratings. A score of A or higher from A.M. Best, Lloyd’s, S&P or Fitch, suggest a trusted provider.

Business Insurance Guide

What's Inside:

  • What is business insurance?
  • Why do I need business insurance?
  • Types of business insurance
  • Professional indemnity insurance
  • Public and product liability insurance
  • Business contents insurance
  • Employers liability insurance
  • Cyber insurance
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Business Insurance Guide

What's Inside:

  • What is business insurance?
  • Why do I need business insurance?
  • Types of business insurance
  • Professional indemnity insurance
  • Public and product liability insurance
  • Business contents insurance
  • Employers liability insurance
  • Cyber insurance

Get Free Advice from an Accountant

Book a free 30 minute call with an accountant. We'll help walk through setting up your business, switching accountant or any of your tax queries. All our accounting packages come with a free 30 day trial.

Read More Guides below:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What is subcontracting? Guide

What is subcontracting?

As an independent contractor, there may come a point in time where you need to consider subcontracting-you might decide to take on work as a subcontractor, or hire a subcontractor for your projects.

Whichever option you're exploring, how do you decide if the benefits truly outweigh the cons? And are there important tips you need to keep in mind?

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Who is liable for damage caused by a defective product? Guide

Who is liable for damage caused by a defective product?

The party that is held liable will depend on the circumstances of each individual case.

If the injury was due to negligence, the party who was negligent will be held liable.

If the injury was caused by a defective product, the "producer" of the product will be held liable. This is generally the manufacturer. In the event that the manufacturer can't be traced, has gone out of business or is located outside the EU, the importer of the product-such as the distributor or supplier-will be held liable.

A party that places its trademark on the product may also be held liable.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Errors and omissions vs professional indemnity Guide

Errors and omissions vs professional indemnity

Errors and omissions insurance and professional indemnity insurance are different terms used to refer to the same insurance cover. 'Errors and omissions insurance' is more commonly used in the US, while the term 'professional indemnity insurance' is typically used in the UK.

Professional indemnity insurance is designed to protect you against legal liability for breach of professional duty while carrying out your business activities. For instance, if a client believes that your service is inadequate or if you've made a mistake, the insurance will cover you against claims the client makes against you.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Contractor Business Services UK Guide

Contractor Business Services UK

Firstly, we'll start with the services that we provide which covers the critical things you'll need to start and operate your contracting business.

For those just getting started, we provide free company registration on Companies House. This is typically done within 24 hours of submitting your details to Forma. It can take under 5 minutes to provide all your details and we'll just need a proof of ID and proof of address for each of the company directors.

We cover all of your key company filing requirements like annual accounts, confirmation statements, corporation tax and ensuring you meet all filing deadlines.

We also help with your annual Self Assessment which is a requirement for all company directors.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How much product liability insurance do I need? Guide

How much product liability insurance do I need?

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Is public liability insurance tax deductible? Guide

Is public liability insurance tax deductible?

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Is business insurance a legal requirement? Guide

Is business insurance a legal requirement?

Employer's liability insurance is the only cover that is mandatory by law for most companies who employ at least one employee.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Is professional indemnity insurance tax deductible? Guide

Is professional indemnity insurance tax deductible?

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What does professional indemnity insurance cover? Guide

What does professional indemnity insurance cover?

Professional indemnity insurance is designed to protect you if your client suffers a financial loss as a result of your professional services. It covers the cost of your legal defence and compensation you need to pay to a client for a claim made against you.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How much does employers' liability insurance cost? Guide

How much does employers' liability insurance cost?

The price of your employers' liability insurance will vary, depending on the number of employees you have, the industry you operate in, as well as the type and level of risk your business faces most often.

To give you a rough idea, here are a few examples of the approximate costs you can expect to pay:

  • According to AXA, 10% of their employers' liability insurance customers paid £42 or less for their cover in 2020
  • NimbleFins indicated that the average cost of employers' liability insurance ranges from about £61 per year for a single office worker, up to £213 or more for a trade worker for a small to medium-sized business in the UK.

To obtain a more accurate estimate, your best option would be to run an online quote with the insurance provider you're looking to purchase from.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What does product liability insurance cover? Guide

What does product liability insurance cover?

Product liability insurance covers compensation claims and legal fees if someone sues you because they've been injured or their property has been damaged by one of your products.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What business insurance do I need? Guide

What business insurance do I need?

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you're a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you'll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Do contractors need public liability? Guide

Do contractors need public liability?

Covering compensation payments and legal costs if a member of the public sues your business because they've been injured or their property has been damaged, public indemnity insurance is highly recommended for all businesses. Many professions need to have p insurance as part of their respective industry body's regulatory requirements and so always double check your contractual agreements.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How much does public liability insurance cost? Guide

How much does public liability insurance cost?

There isn't a standard average price. The cost of your public liability insurance depends on a number of factors, including the type of business you run and the level of cover you select. Businesses that are perceived as riskier will usually pay a higher price for their public liability insurance.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
How to Become a Contractor Guide

How to Become a Contractor

So, you're thinking of becoming a contractor.

There's probably one of three reasons driving this:

You've received a Job Offer

You've just received a job offer, and now need to decide on whether to set up a limited company, umbrella company or become a sole trader (or you may not have the choice in deciding).

You're in the right place.

This guide will walk you through the best company structure for you, accounting support, VAT, business services you need to consider and finding new opportunities.

You want to increase your pay

You'd like to increase your pay by switching from permanent roles to interim/ contractor roles.

Contracting can be very lucrative.

You'll need to be comfortable with a certain level of risk (short notice periods), increased monthly admin (as a Limited Company) and less benefits than being an employee (paid leave, sick days).

However, you'll earn more, get greater flexibility and hopefully grow a consulting business.

Project Flexibility

Getting multiple requests for your services? Amazing.

Setting yourself up as a contractor through a Limited Company means you can start expanding your client base rapidly and work on different projects a few days a week.

You can still set this up as a current PAYE employee of a company, and this can be a great stepping stone to launching your own business.

Let's talk about the right business structure for you.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Do I need employers' liability insurance? Guide

Do I need employers' liability insurance?

For most employers, it is mandatory to have at least £5 million of employers' liability cover, or face a fine of up to £2,500 per day. There are some exceptions to this rule, however: most public organisations and businesses that only employ close family members (as long as they're not incorporated as limited companies) don't necessarily need to have employers' liability insurance.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Contractor & Freelancer Insurance Guide Guide

Contractor & Freelancer Insurance Guide

  • What is business insurance?
  • What insurance you need
  • Legal requirements for insurance for freelancers
  • Legal requirements for insurance for contractors
  • How to find the best policy
Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Can I get public liability insurance with a criminal record? Guide

Can I get public liability insurance with a criminal record?

Whether you can get public liability insurance with a criminal record depends on a number of things, including the details of your criminal convictions. Although some insurers won't provide insurance to anyone with a criminal record, some will provide it in certain circumstances.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
Do I need professional indemnity insurance as a contractor? Guide

Do I need professional indemnity insurance as a contractor?

Covering legal costs and expenses in your defence as well as any damages or costs that may be awarded, professional indemnity insurance comes highly recommended for those providing professional services. Many professions need to have professional indemnity insurance as part of their respective industry body's regulatory requirements and so always double check your contractual agreements.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
What does employers' liability insurance cover? Guide

What does employers' liability insurance cover?

Employers' liability insurance is meant to protect employers from financial losses following work-related accidents. It covers the compensation costs and legal fees that result from being sued by an employee or ex-employee for illness or injury caused by their work in your company.

Read Full GuideRead Full GuideCalculate Now

Download Now:

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Business Insurance Guide