What business insurance do I need?

Running a business comes with risks, from unexpected accidents to legal disputes that can seriously impact your operations. Business insurance helps protect your company against these risks but many are left wondering ‘what business insurance do I need?’. Especially with so many policies available.

In the UK, some forms of business insurance are legally required, while others are highly recommended depending on the nature and scale of your operations. Whether you’re running a limited company, employing staff, or working for yourself, the right insurance can protect your livelihood and offer peace of mind.

What Business Insurance Is Mandatory in the UK?

While not all business insurance is compulsory, there are a few policies that UK businesses must have by law, depending on their circumstances:

Employers’ Liability Insurance

If you employ anyone, even just one person on a part-time or temporary basis, you are legally required to have employers' liability insurance. This policy protects your business if an employee is injured or becomes ill as a result of working for you.

• Minimum cover required by law: £5 million
• Penalty for non-compliance: Up to £2,500 for each day you’re not insured

Commercial Motor Insurance

If your business uses vehicles—whether a single van or an entire fleet—you must have commercial vehicle insurance. Standard car insurance does not cover vehicles used for business purposes.

Professional Indemnity Insurance (for regulated professions)

While not required for all businesses, certain professions (such as solicitors, accountants, architects, and financial advisors) must have professional indemnity insurance due to regulatory body requirements. This policy covers you if a client suffers a financial loss due to your professional advice or services.

Do You Need Business Insurance if You’re Self-Employed?

Yes. Although it’s not always a legal requirement, self-employed professionals and sole traders should strongly consider business insurance. As a self-employed person, you are personally responsible for your business and its liabilities.

Depending on the type of work you do, the following insurance options can be crucial:

• Public Liability Insurance – Protects you if a client or member of the public is injured or their property is damaged due to your business activities.
• Professional Indemnity Insurance – Essential if you provide advice or services that clients rely on.
• Tool or Equipment Insurance – Useful if you rely on specific tools or machinery for your trade.
• Income Protection Insurance – Provides financial support if you can’t work due to illness or injury.

Other Types of Business Insurance to Consider

Beyond the mandatory policies, here are some common types of business insurance that can help protect your business from various risks:

Public Liability Insurance

One of the most common types of insurance, especially for businesses that interact with the public. Public Liability Insurance covers injury or damage claims from third parties. For example, if a customer trips over a cable at your premises and sues you, this insurance can cover legal costs and compensation.

Product Liability Insurance

If your business manufactures or supplies products, this insurance protects you against claims of injury or damage caused by those products.

Business Interruption Insurance

If an unexpected event (like a fire or flood) halts your operations, a business interruption insurance policy helps cover lost income during the downtime.

Cyber Insurance

With rising cyber threats, cyber insurance is vital if you store sensitive customer data or rely heavily on digital systems.

Directors’ and Officers’ (D&O) Insurance

Directors and Officers insurance protects company directors and senior management from personal liability if they are sued for decisions made in their professional roles.

Stock and Contents Insurance

Covers damage or loss of physical stock, tools, equipment, or office contents due to events like fire, theft, or vandalism.

Choosing the Right Business Insurance

• The insurance you need depends on several factors, including:
• Your industry and business activities
• Whether you have employees
• Where your business operates
• Your contractual or regulatory obligations

While it’s tempting to cut costs, having the right insurance in place is a crucial safety net that can save your business from major financial losses.

If you're unsure which policies you need, consider speaking to a specialist business insurance broker or using comparison tools to evaluate your options.