What business insurance do I need?

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you're a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you'll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

Although employers liability insurance is the only mandatory cover (applying to businesses with employees only), for many businesses, insurance is a necessity for two key reasons.

Firstly, most businesses would be unable to afford the cost of a claim.

Secondly, you may find that other businesses or stakeholders (investors, for example) that you interact with require that you have a certain level of business insurance as a prerequisite to working together.

This is not an exhaustive list of the types of business insurance products out there, but covers the products you're most likely to want to consider.

Professional indemnity insurance

Professional indemnity insurance covers risks in association with your professional services. It’s a must-have for many businesses.

This is because the majority of businesses do at least one of the following: provide a professional service, handle client data, or work with intellectual property. It’s not a legal requirement, but many clients will insist on your having it as a prerequisite to working with you - and in certain professions, you may find that your regulatory body requires it. 

Public and product liability insurance

Public liability insurance, which often includes product liability insurance as a package, covers your interactions with third parties (by this definition, anyone who isn’t your employee).

It’s a fairly common and straightforward cover; if your business causes an injury or property damage to a member of the public, public liability insurance will cover you for the resulting legal and compensation costs.

Product liability follows the same concept, but for any products you sell or give clients (whether you’re the supplier, manufacturer or retailer).

It’s worth noting that even if your business typically doesn’t interact with the public, if you exhibit or trade at events or fairs, the organiser will typically require that you have your own public liability policy in place. 

Business contents insurance

Much like home contents cover, business contents insurance covers your stock, equipment and furniture.

It will often include some level of portable equipment cover, for things like laptops and mobile phones, which are often with you when you’re on the move.

Employers liability insurance  

Employers liability insurance is the only business insurance required by law (for businesses with one or more employees) and is designed to cover workplace injury or property damage claims made by employees.

Some companies may be exempt, such as businesses that only employ immediate family members.

It’s worth checking on this, as not being appropriately covered could incur a fine of up to £2,500 per day for each day that you’ve not been insured! Note that you may also be fined £1,000 if you do not display your employers liability certificate, or fail to show it to inspectors.

Cyber insurance

Cyber insurance is all about protecting risks exposed by your data and computer systems. It’s been embraced by larger, more technologically focused businesses, but is fairly underappreciated in general.

In reality, it’s a cover to consider for any business that collects, stores, or processes information - and certainly one to think about if you’re a digital-first business, such as an online retailer.

With cyber risks being some of the most challenging to protect yourself against, you may decide that getting cyber insurance is a small price to pay for the peace of mind and assurance that if you do experience a data breach or cyber-attack, you’ll have expert support at hand.  

Management liability insurance

Also commonly known as D&O insurance (short for directors and officers insurance), this cover is relevant to you, unless you’re a sole trader.

It’s often misunderstood that personal liability claims are covered under professional indemnity or general liability policies - yet this is rarely the case. D&O cover is the only type of policy which specifically protects those in management positions against allegations of mismanagement.

Choosing a business insurance policy is actually fairly straightforward, once you’ve understood your set of risks and determined what you need covered.

Superscript has created a guide to business insurance which includes questions to ask yourself when thinking about which covers you need.

In a more general sense, some good steps to take when choosing financial products are:

• Check reviews. You’ll usually be able to find these on a selection of the following: Facebook, Feefo, Google and Trustpilot. 
• Check that customer support is available in a way that works for you. If you aren’t able to make phone calls during working hours, for example, you’ll need a provider which offers support by email or live chat. 
• Check regulatory ratings. A score of A or higher from A.M. Best, Lloyd’s, S&P or Fitch, suggest a trusted provider.