What is business insurance?

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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, certain business insurance policies 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 insurance, professional indemnity insurance, employers’ liability insurance and office insurance. You can also add specialist products such as cyber and data risk protection.

Cover can be tailored to the requirements of your industry and the size of your business – whether you’re a sole trader working from home, the founder of a fast-scaling tech start-up or the director of an agency with multiple offices.

Do I need business insurance?

There are risks in all lines of work, so having a comprehensive package of cover that meets your business’ legal liabilities could prove useful, whether you run a small private tutoring service or large management consultancy firm.

In some instances, an employers’ liability policy might be legally mandated and professional indemnity insurance can also be an industry requirement. To check the rules, visit the government’s guide to setting up a business (external link) or contact your industry regulator. The Association of British Insurers (external link) also outlines the circumstances in which commercial cover may be legally required.

No two businesses are the same. Growing start-ups, sole traders, freelance individuals and consultants across many industries experience varying levels of risk. As such, an accountancy firm and a web development agency are likely to have differing requirements. That’s why a combined business insurance policy needs to be flexible to work for the specific demands of your industry and operations.

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. 

Types of business insurance

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

  • Professional indemnity insurance
  • Public liability insurance
  • Product liability insurance
  • Employers’ liability insurance
  • Personal accident insurance
  • Office insurance
  • Commercial building insurance
  • Cyber and data insurance
  • Self-employed and sole trader insurance
  • Directors’ and Officers’ insurance
  • Business equipment and office contents insurance
  • Tool insurance
  • Equipment breakdown insurance
  • Business interruption insurance
  • Crime insurance
  • Medical malpractice insurance 

What does business insurance cover?

A business insurance policy can 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 and the situations where being insured can provide financial reassurance.

Client miscommunication

A miscommunication between your employee and the client means their contact information was printed incorrectly in the brochures you designed. This mistake resulted in a complete reprint, at a cost to the client. Their negligence claim against you may be covered by a professional indemnity policy.

Trade fair mishap

You’ve set your stand up at the trade fair but have run out of time to properly secure your marketing boards. Unfortunately, you didn’t spot a leaning board before it fell on a passer-by, injuring their shoulder. If the injured party makes a claim against your business, public liability insurance could help with the costs.

Repetitive strain injury

Your senior IT technician works frequently on a laptop without a keyboard or wrist rest and obtains a repetitive strain injury in their wrist as a result. The injury requires physiotherapy treatment, pain relief medication and a wrist support. The employee makes a claim against your business for the affliction – fortunately, legal fees and compensation are usually covered by your employers’ liability policy.

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How much business insurance do I need?

When deciding what business insurance policies 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 adding, which will also adjust the cost of the policy accordingly.

Business insurance quotes with Hiscox start from £10 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.

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