Do I need business insurance?

Most types of business insurance are not legally mandated in the UK, with the exception of employers’ liability insurance. You might need employers’ liability insurance by law in some circumstances, and you can be fined £2,500 for every day you don’t have the required cover[1]. This rule usually applies if you employ people.

To check the rules:

• Visit the government’s guide to setting up a business (external link)
• Visit the Association of British Insurers (external link) for the circumstances in which commercial insurance cover may be legally required
• Contact your industry regulator or any industry bodies where you’re a member.

Explore our Hiscox guide to employers’ liability insurance.

Though you won’t need other types of business insurance by law, you might find you’re subject to specific industry or contractual requirements. For example, you might decide you need a certain type of business insurance to manage key operational risks.

Public liability insurance

In some cases, you may need public liability insurance to help protect your livelihood – for example, if you work amongst members of the public. It’s also worth checking with professional bodies and your clients to see if they have any rules regarding the minimum amount of cover.

This form of business insurance is designed to protect you from the impact of claims made by people outside your business. Without it, compensation costs for injury or property damage can run into the millions[2].

Professional indemnity insurance

Professional indemnity is business insurance that helps combat complaints about your services or advice. It’s what professional services firms use to absorb the cost of potential lawsuits. But do you need it?

If you give professional advice or perform services that can have an impact on your clients’ finances, then the answer may be yes. In fact, you may find client contracts insist on it.

Portable equipment insurance

These days, most businesses use electrical equipment such as mobile phones, laptops and specialist apparatus. These items can be expensive to replace, so you may feel you need business insurance to cover them in case of theft, loss or damage.

Portable equipment insurance might prove useful alongside your standard commercial buildings or business contents insurance.

Cyber insurance

If you use the internet, you may feel you need to build cyber insurance into your business insurance policy. This can help to defend businesses and sole traders from the impact of criminal digital attacks and data breaches. It can also help to absorb the cost of:

• System restoration
• Legal claims
• Compensation
• Fines
• Ransoms.

Other businesses and business leaders might feel they need a slightly different portfolio of cover types – for instance, to include management liability insurance for risks to directors. Find out more about the types of business insurance in our FAQ guide.

Do you need multiple types of business insurance?

No two businesses are the same. Growing start-ups, sole traders, freelancers and consultants experience varying levels of risk.

As such, an accountancy firm and a web development agency are likely to have differing requirements. That’s why tailoring a business insurance policy with multiple types of insurance can be reassuring. Your cover needs to be flexible to work for the specific demands of your industry and operations.

Insuring against unexpected events – an example

Choosing to insure against the risks your business may face could help to safeguard against the cost of unexpected events and potential claims.

For instance, a photographer may drop and break their camera at an event, then a guest might trip over their camera bag and become injured. The photographer may benefit from separate commercial policies for this single event alone. 

Portable equipment insurance can help pay the costs of repairing or replacing the broken camera, plus a public liability policy can help with the cost of compensating the injured guest if they make a claim.

Certain types of businesses – such as those that handle digital data – may need cover tailored to their cyber risks, while medical malpractice insurance may be relevant for certain health professionals or therapists. 

When deciding which business insurance policies you need and how much cover you require, you might need to consider the level of risk your company faces and any specific requirements.

For instance, consider if you visit client premises, or conduct business where the public could be impacted if something went wrong. You might also factor the size of your business into the decision. 

Your considerations could include the potential for accidents, damage and theft to occur, as well as the legal disputes that could arise from a claim. These factors will often determine the insurance products you may benefit from, which will also adjust the cost of the policy accordingly. 

Business insurance quotes with Hiscox start from £8.40 a month* and custom policies can be tailored specifically for your business and the risks faced, so you only pay for the cover you need.

*Figures based on an average of all business insurance policies sold to at least 10% of our customer base between January 2023 and January 2024 

[1] - https://companieshouse.blog.gov.uk/2019/04/30/what-insurance-does-a-small-business-need/

[2] - https://companieshouse.blog.gov.uk/2019/04/30/what-insurance-does-a-small-business-need/

Disclaimer:

Our FAQ pages provide general information and background around the topic covered. FAQ pages are reviewed and monitored periodically by our insurance experts. But the content is not intended to be read as advice and any material is for general information purposes only. If you would like advice for any content, please seek professional assistance.