Every small business is different to the next, so a business insurance policy needs to be specific to the unique needs of every line of work. Comprehensive insurance will include protection for a range of legal liabilities, from employees and clients to your business premises.
The risks your business insures against should reflect your daily operations and responsibilities. Damage to your own equipment or that belonging to a third party could result in severe business interuption and delays to your work, or a public liability claim. You'd need seperate commercial policies to help support your small business in each of those scenarios.
Should something go awry during a client project and your SME gives its name to something sub-standard, you'll need professional indemnity insurance to protect against claims of negligence. The most straightforward policy is employers' liability cover, this is required by law by businesses small and large.
Do I need business insurance?
While most forms of business insurance cover are not a legal requirement in the UK, they can offer peace of mind that if a claim is made against your business, you are protected financially. It’s also common for clients to ask for certain types of insurance cover as a term of contract.
Employers’ liability insurance is the one type of business insurance cover that could be compulsory for your business, as it is a legal requirement for nearly all businesses that employ one or more people.
This said, other forms of cover may also be seen as essential to business owners and can offer their own benefits. Of all the types of business insurance available as part of a full package, the core types of insurance needed for a small business are most likely to be the following:
Why might your business need liability insurance?
Your business needs public liability insurance if you’re in regular contact with members of the public. This type of cover will protect the business from the costs associated with compensation claims for injury or damage made by clients, customers or suppliers.
Examples of industries which Hiscox provide specialist liability cover to:
- Retail and shop
- Hospitality and catering businesses
- Business consultants
- Construction contractors and tradesmen
- Beauty industry and hairdressers
Why you need employers’ liability insurance
If your business employs staff, it’s likely that you are legally obliged to have some form of employers’ liability insurance. This is the case even if you only employ one other person or you have employee on a temporary contract. Failure to do so could incur a fine of up to £2,500 a day until you take out the correct cover.
An employers' liability policy will protect the business against compensation claims made by an employee, regarding injury, illness or damage as a result of their work. You can find out more about this type of liability in our employers insurance FAQs.
Does your small business require professional indemnity insurance?
If your business offers a professional service or advice to other businesses, indemnity insurance could be a sensible choice for you. This kind of cover will protect the business from legal costs and expenses incurred in your defence, if you were to make a professional mistake or alleged to have provided inadequate service.
Some professional bodies make this professional insurance a legal requirement. Industries which are often required to have PI cover include:
If you don't see your industry on this list and want more information on whether or not your small business needs commerical indemnity cover, check out our FAQ: Who needs professional indemnity insurance?
When do you need office insurance?
If you own the property that your business runs from, whether it be an office, a restaurant, a shop or even your home, office insurance is essential for covering any costs incurred by loss, damage or theft of the premises and its contents. If you work from home, you may want to check that your home insurance covers business property, as not all policies do. If you rent your business premises, it’s important to check with the landlord what is covered.