What is business insurance?

Business insurance, or commercial insurance, refers to several types of cover designed to protect your business when matters take an unexpected turn. 

In the event a compensation claim is made, or legal action is taken against your company for incidents such as property damage or giving incorrect advice, business insurance can help to safeguard you against related financial risks.

A combined business insurance policy brings together two or more of the many types of business insurance available. Some of the core products in a combined policy include public liability insuranceprofessional indemnity insuranceemployers’ liability insurance and office insurance. You can also add specialist products such as cyber and data risk protection.


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What is commercial insurance?

Commercial insurance is simply another name for business insurance. So, insurance you take out for your business or as a self-employed individual. In the UK, people generally use the term ‘business insurance’ as opposed to ‘commercial insurance’.


Do I need business insurance?

Business insurance isn’t, generally, a legal requirement in the UK. But there are some instances where it is essential.

If you employ staff, even one person, you must have employers’ liability insurance as set out in law (external link). And if you want to be a member of a professional association, such as those for architects and accountants, you may be required to have a minimum level of professional indemnity or public liability cover in place.

But regardless of whether it’s a requirement, business insurance can help to protect you when things go awry. If you think you’d struggle to pay compensation or legal costs should someone take you to court over your work, business insurance could be worth considering.

Learn more with the help of our in-depth FAQ page, what business insurance do I need?

What types of businesses take out insurance?

Cover can be tailored to the requirements of your industry and the size of your business, whether you’re a tradesperson, a retailer or in the professions. You could be a plumber or an electrician. You may work as a self-employed accountant or run a small independent bakery. Perhaps you’re a sole trader working from home, or the founder of a fast-scaling tech start-up.

Popular professions we provide insurance to include:

How much does business insurance cost?

There’s no one-size-fits-all cost of business insurance. How much you pay depends on what you need. At Hiscox, we tailor cover to you, so the cost of your business insurance is affected by things such as:

  • The size of your business
  • Where you work
  • The types of cover you want
  • The cover limits you set for each

Small business insurance costs start from £8.40 per month*. But you can tailor your package by using our build my cover tool or speaking to one of our team on the phone.  

Learn more at our in-depth FAQ page, how much does business insurance cost?

*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 

What does business insurance cover?

A business insurance policy can help to safeguard your company against day-to-day operational risks by helping with related costs. Such vulnerabilities are often unique to each small business, which is why different insurance products cover separate claims. 

Reading real-life claim stories may help you to understand what’s suitable for your company.

Problems with professional services

Miscommunication can result in differing expectations between businesses and clients. When you miss the mark and provide poor advice or services, you may risk reputational or financial damage to your business. If a customer makes a negligence claim against you, a professional indemnity policy may help you get back on track.

An injured member of the public

Accidents, unfortunately, happen. Even if you take extra precautions as a business, you can’t always prevent injuries. If a member of the public is injured on your property or because of your work, you could be held liable. If they make a claim against your business, public liability insurance could help pay compensation and legal costs.

Injured employees

Regardless of your industry or sector, your employees can suffer injuries or become ill at or as a result of their work. If they are injured while using machinery, for example, or they fall on a wet floor, you could be held liable. If they decide to take legal action against you, an employers’ liability policy can help to pay compensation and legal fees.

Types of business insurance

There are many types of business insurance designed to cover your company for different circumstances. The main types of cover are:


Public liability insurance

Public liability insurance can help protect you against claims made by people from outside of your business. These can include injury, illness or property damage. Regardless of your line of work, accidents can happen, and they don’t always need to be directly related to the work you do. The claim may be against you or an employee, or at your business premises or offsite. Public liability insurance can help pay legal costs and compensation.

Professional indemnity insurance

Professional indemnity insurance can help to protect both your business and your employees if someone alleges you’ve provided negligent advice or services. It doesn’t matter whether you carried out your work as agreed or simply misunderstood the brief. Covering legal fees and compensation that may be awarded, professional indemnity insurance can help set things right. Some professional bodies require members to have PI.

Employers’ liability insurance

A requirement under UK law if you employ people outside of your family, employers’ liability (EL) insurance is there to help protect both you and your employees. If an employee falls ill or becomes injured on the job, they can claim compensation from you. EL cover can help pay that as well as any legal fees. And for every day you don’t have EL insurance in place, the government can fine you £2,500 (external link).

Other types of business insurance include:

Product liability insurance

If a product you’ve manufactured, modified or sold causes injury or damage, product liability insurance can help protect you against claims.

Personal accident insurance

If you or a senior member of staff suffer an injury and are unable to continue working, personal accident insurance can offer financial support.

Office insurance

Office insurance can help to provide financial support in the event of a break-in and theft of equipment or damage caused by fire or flood.

Cyber and data insurance

Cyber insurance can help your business to recover from a data breach or cyber attack. For example, you’ve been hacked, and your data was compromised.

Self-employed and sole trader insurance

If you’re self-employed or act as a sole trader, you can get tailored business insurance to guard against the risks of setting up on your own.

Directors’ and officers’ insurance

Directors’ and officers’ (or D&O) insurance can help to cover claims made against directors, partners and officers at your business.

Commercial property insurance

If you own your business premises, commercial property insurance can provide cover for your property against damage caused by fire, flood or storm.

Business equipment and office contents insurance

Business equipment and office contents insurance, can help with replacing essential equipment if things are lost or stolen from your premises.

Tool insurance and portable equipment insurance

Tool insurance (for tools away and in transit) and portable equipment insurance (for equipment away and in transit) are variations of property away and in transit insurance. This cover can help you with the costs of replacing any tools you may need to do your job, whether they’re broken, lost, or stolen while you’re away from your premises.

Equipment breakdown insurance

Some jobs have equipment that’s essential to the role. If your equipment experiences mechanical or electrical failure, equipment breakdown insurance could help to replace it to get you back on track.

Medical malpractice insurance

If you’re a medical practitioner any claims of malpractice could be harmful to your business. Medical malpractice insurance can help to protect yourself and your business.

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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.