What business insurance do I need?

Chris Andreou

April 21, 2021

what business insurance do i need guide

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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

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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
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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

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What is an insurance broker? Guide

What is an insurance broker?

Insurance brokers are professionals who sell various types of insurance coverage to clients.

Auto, home, health, life, property, and other varieties of insurance all fall under this umbrella. Some insurance brokers work independently and others work for brokerage firms; some deal with individuals, and some elect to work only with businesses.

An insurance broker's job is to help inform clients of how best to handle risk management. They help make it possible for individuals and companies to obtain and provide insurance for themselves, their families, their property, and their businesses.

Within the UK, brokers are regulated on the state level.

They're often required to hold a specialized license that can only be obtained after completing education and testing requirements. The information they learn during the period prior to certification allows them to guide clients and answer their questions without trouble. Brokers seek to help clients understand their liabilities and how to manage those risks most effectively.

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What business insurance do contractors and freelancers need? Guide

What business insurance do contractors and freelancers need?

As a self-employed person-whether you're running a full-time freelance gig, or hustling on the side-you'll need to think about the risks you face and whether business insurance could be a good idea.

In this article, our business insurance partner, Superscript, explains the covers you may want to consider getting.

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Do contractors need insurance? Guide

Do contractors need insurance?

As a contractor working through your own limited company, it is recommended that you are covered by business insurances whether that be for your own peace of mind or in fact something that is mandatory in your contract.

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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?

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Public liability claim examples Guide

Public liability claim examples

Public liability insurance claim examples:

1. Claims made against an electrician:

An electrician was engaged for the installation of a heating system in a commercial building. However, the installation was incorrectly done and caused a fire resulting in damages to the property, which amounted to £50,000. The electrician's insurance policy covered the cost of damage.

2. Claims made against a furniture assembler:

A cabinet that the furniture assembler had fitted fell from the wall, and caused injury to another contractor. The furniture assembler was required to pay just £250, as his insurance policy was able to cover the majority of the costs (£25,235).

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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.

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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.

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How much professional indemnity insurance do I need? Guide

How much professional indemnity insurance do I need?

You can usually choose between £50,000 and £5 million of professional indemnity insurance. Your regulator, professional body or client contracts may indicate you the minimum amount you need. You should also consider the scope of your projects and the potential compensation demand if something went wrong.

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Does public liability insurance cover employees? Guide

Does public liability insurance cover employees?

Public liability insurance doesn't cover claims made by employees. It's designed to cover compensation claims made by a third party - for example a client, a customer, a supplier, or another member of the public - because they've been injured or their property's been damaged by your business.

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How do I become a contractor? Guide

How do I become a contractor?

To become a contractor, you need to:

  • Do your research: The first step you'll need to do is to conduct in-depth research, and think through various important factors-from finances and tax implications, to lifestyle and business opportunities-to ascertain if becoming a contractor is the right decision for you.
  • Decide on how you'll operate: As a contractor, you may operate as a sole trader, through your own limited company, or work with an umbrella company or recruitment agency.
  • Develop a business strategy: Strategic planning isn't set in stone-but working out a plan is still helpful, as it is a way for you to consider multiple perspectives, identify potential opportunities and pitfalls and conceptualise back up plans you could fall back on.
  • Get your business finances and insurance sorted out: Setting up a business bank account, registering a company, determining the level of accounting support you need and investing in business insurance are important aspects you need to sort out before you begin contracting.
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Understanding how business liability insurances protects your company Guide

Understanding how business liability insurances protects your company

As a self-employed person or small business owner, having the right insurance is everything.

Most businesses don't consider their doors open and ready for customers without a full battery of liability and premises insurance protection. And for good reason.

Insurance isn't just something you have to have according to laws or industry regulations; it's a type of legal and financial protection that every business needs, no matter how big or small.

While everyone can see the importance of insuring your physical building and its contents, it may be more difficult to see the big picture when it comes to liability insurance. Why do you need so much insurance, why so many layered policies?

That is exactly what we are here to answer today.

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Business Insurance Guide Guide

Business Insurance Guide

  • 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
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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.

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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.

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Is a contractor an employee? Guide

Is a contractor an employee?

Contractors can be self-employed, a worker or an employee. Those who are employed through an umbrella company or an agency could be considered a worker or an employee.

If a contractor is a sole trader or runs a limited company, he or she will then be considered a self-employed person.

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What is professional indemnity insurance? Guide

What is professional indemnity insurance?

Professional indemnity insurance covers risks in association with your professional services. It protects your business from legal and compensation costs that arise should a client make a claim against you, under circumstances such as:

  • Defamation and libel
  • Loss of documents or data
  • Professional negligence
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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.

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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.

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Difference between public liability and employers' liability Guide

Difference between public liability and employers' liability

Both public liability and employers' liability insurance are business covers that can pay out if your business faces a compensation claim for injury. The difference is that public liability insurance covers claims made by a third party (i.e. a member of the public like a client, customer, supplier or passerby), while employers' liability insurance covers injury claims made by an employee.

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What is employers' liability insurance? Guide

What is employers' liability insurance?

Employer's liability insurance is designed to cover workplace injury or property damage claims made by employees. It is the only business insurance required by law for businesses with one or more employees.

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Business Insurance Guide