Types of business insurance

Business insurance is there to safeguard you against the everyday risks you can face while running a company.

There are different types of business insurance, and the types you may need depend on your business and what you do. From the moment you start up your company, it’s a good idea to get business insurance to cover you for any risks involved in working with clients, customers and employees.

Some types of cover may be essential. Employers’ liability insurance is a legal requirement for most businesses with even one member of staff. Other types of business insurance help to protect against certain risks, such as public liability insurance – which covers you for any claims made against your business.


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What are the main types of business insurance?

The main types of business insurance are:

·       Professional indemnity insurance

·       Public liability insurance

·       Employers’ liability insurance

·       Personal accident insurance

·       Directors’ and Officers’ insurance

·       Product liability insurance

·       Business equipment and office contents insurance

·       Tool insurance, or portable equipment insurance. This is also known as property away and in transit insurance

·       Equipment breakdown insurance

·       Self-employed and sole trader insurance

·       Commercial building insurance

·       Business interruption insurance

·       Crime insurance

·       Cyber and data insurance

·       Medical malpractice insurance 

These different types of business insurance cover you for different scenarios. We can work with you to find the ideal combination for your company, so you can focus on your business.

Types of business insurance: explained

There are many different types of business insurance available – the right cover depends on your business and the nature of your work. Whether you own a marketing consultancy or garden design service, you’ll require a tailored package with a variety of cover including public liability insurance and employers’ liability insurance. Cyber and data insurance is popular with professionals who use computers, from business and IT consultants to salon owners. Discover what business insurance you need with Hiscox.

Professional indemnity insurance

Professional indemnity insurance can provide protection for your business when things don’t quite work out as you planned. For instance, a customer might claim there is a fault with a service you delivered leading to a negligence claim. While you always have the best intention when it comes to what you do for your customers, PI insurance protects you from the cost of unexpected mistakes like these. With professional indemnity insurance, any legal fees and compensation expenses will be covered – so you can continue with business as usual.

Professional indemnity insurance is a valuable cover for any business that provides a professional service, especially if this service rests on giving business advice.

Public liability insurance

Anyone can make a claim against you if they feel their property has been damaged or they have been injured as a result of your business activities. Having public liability insurance in place provides the reassurance you need for unexpected circumstances, as there are several factors you just can’t plan for. Even if you’re not at fault, public liability insurance is there to ensure your finances aren’t impacted as a result of third-party bodily injury or third-party property damage claims – all legal and compensation fees will be covered.

Commercial public liability insurance protects your company from such third-party claims. Although it’s not a legal requirement to have this type of business insurance in the UK, it safeguards you against liability claims.

Employers’ liability insurance

In the UK, employers’ liability insurance is a legal requirement for most businesses. If you employ one or more members of staff, you’re legally obliged (external link) to have this cover in place and you could face a fine if you fail to do so.

This insurance provides protection if one of your employees becomes ill or injured as a result of work. Employers’ liability doesn’t just cover full-time or part-time employees. It’s also a requirement if you enlist the help of volunteers or employ people on a casual basis, even if it’s a friend helping at the weekend. You might also consider legal protection insurance as another layer of cover for employment disputes.

Personal accident insurance

Taking out personal accident cover will help to protect your business financially if you or a member of your team suffers an accidental injury leaving them unable to work. Personal accident insurance is designed to minimise the impact of a core employee who can’t come to work for over two weeks, or longer.

Directors’ and Officers’ insurance

Obtaining directors’ and officers’ liability insurance protects you if any claims are made against you in your role as company director.

Directors have responsibilities that go above and beyond your average employee – which is both a reward and a risk if something goes wrong. Directors’ and officers’ insurance is also known as management liability insurance and it protects from claims made directly against you, from a health and safety matter to a negligence claim from discontent shareholders.

Product liability insurance

Product liability insurance offers another layer of cover alongside your public liability insurance and is suited to businesses that design, produce or supply products. In the unlikely circumstance that a product causes injury or damage to a third party or their property, you could be held liable. If this were to happen, you might face compensation costs and legal fees associated with a claim. Taking out product liability insurance with Hiscox offers you the reassurance of knowing those costs are covered.

Business equipment and contents insurance

No matter the size of your company, business contents insurance is useful. It protects all the vital instruments you require for the day-to-day operation of your business.

Office insurance safeguards the assets you keep and use on site, such as computers, desks and photocopiers. If something happened to your equipment, it could be difficult for you to continue business as usual – with insurance in place, you can get the replacement you need quickly.

Equipment breakdown insurance

Equipment breakdown insurance can cover business equipment and machinery that unexpectedly stops working. This might be due to an electrical or mechanical fault. This product covers items at your premises, and computers within the UK.

You will invest in the best equipment possible to ensure the smooth running of your business, but you can’t predict when things might go wrong. Equipment breakdown insurance protects your business against sudden and unexpected mechanical or electrical failure.

Tool insurance

Tool insurance covers industry-specific tools while they're away from your normal workplace. Like portable equipment insurance, this is a form of cover for property away and in transit. It’s designed to support tradespeople who rely on their tools day in and day out for getting the job done.

Whether you’re a handyman, carpenter or electrician, tools insurance will protect you from the cost of tool loss or damage – making sure you get replacements or repairs for your tools fast, so you can continue with the job in hand.

Portable equipment insurance

Portable equipment insurance, also known as property away and in transit cover, covers items while you're on the move. It can be useful for people who work from different sites or travel to business meetings.
If insured equipment is stolen, accidentally broken or lost, this product can help with repairs and replacements.


Commercial building insurance

If you own the building you operate your business from, you should invest in commercial property insurance. Once this cover is in place, you’ll have the benefit of knowing you’re protected if the property becomes damaged – in the event of a flood or fire, for instance.

It’s important to note that this type of business insurance only protects the building itself. The contents, such as your office equipment you might have, will need to be covered by office contents insurance.

Self-employed and sole trader insurance

Running your own business takes a great deal of hard work and dedication and comes with unique risks – that’s why it’s so important to invest in comprehensive cover. A tailored self-employed insurance or sole trader policy will provide you with the comfort of knowing what you’ve created is protected from these risks.

Build your cover to include policies such as public liability insurance and professional indemnity – and remember it’s a legal requirement to have employers’ liability insurance if you have one or more employees.

Your home insurance might not cover business property, so if you work from home, include office contents insurance in your business insurance policy too.

Business interruption insurance

The prospect of losing income is daunting for any business owner, especially if this happens due to events outside of your control. Business interruption insurance, or business income insurance, offers protection against loss of income resulting from circumstances such as a fire or flooding rendering your office unusable.

This type of business insurance is invaluable for unexpected situations that cause damage and will keep your company afloat by covering you for loss of income and the costs you incur.

Business interruption insurance, or business income insurance, offers protection against loss of income resulting from material damage caused to property. This type of business insurance is invaluable for unexpected situations that cause damage and will keep your company afloat by covering you for loss of income and the costs you incur.

Read our Coronavirus FAQs for more information on our business insurance policies and the impact of Coronavirus.

Crime insurance

As technology advances, crime cover is becoming an increasingly vital business insurance policy to have. The kinds of crime businesses fall victim to is also changing all the time, meaning crime insurance is a fast-evolving type of commercial cover.

Remain one step ahead of crime and cover your business for these unforeseen situations. Invest in one of these policies and your business will be covered if you’re the victim of theft, damage to property, or fraud.

Cyber and data insurance

As businesses become more reliant on computer systems, cyber insurance has emerged as an increasingly essential business insurance policy to have.

Cyber and data insurance protects businesses against increasingly complex risks online. These cyber threats have become more prevalent meaning protecting your data and your business has never been more important. Put a comprehensive cyber insurance policy in place and you’ll be covered for the time and money it takes to fix a data breach or hack.

Medical malpractice insurance

If you provide professional medical treatment to patients, medical malpractice insurance can protect you against the cost of legal defence and compensation payments. Of course, in your line of work you provide care and make careful decisions for the health of your patients and give your very best. However, this also means that insurance is vital as you could be exposed to claims.

With Hiscox, medical malpractice cover is available as part of combined professional, treatment and public liability insurance.

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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.