Which types of business insurance must you have in place?

With dozens of different types of insurance cover available for businesses, here is ByteStart’s review of the main insurances that businesses ‘must have’, some insurance cover you ‘should have’, and several ‘could have’ policies.

Business insurance policies you are legally required to have

Employers’ liability insurance

Once you take on your first employee, you are required by law to take out employers’ liability insurance. This will protect your employees if they fall ill or are injured in the course of their work. Your insurance certificate must be displayed where your staff can see it.

You don’t need employer’s liability insurance if your limited company has just one employee, who owns 50% or more of the share capital (i.e. you). If you are a sole trader and do not employ anyone, or you only employ close family members, you should also be exempt.

Even if you don’t have any full-time employees, and just occasionally hire staff or use temps or seasonal workers, you must take out cover.

You can be fined up to £2,500 per day if your business doesn’t have a suitable employers’ liability policy. The size of the potential fine dwarfs the cost of cover so it’s not something you should delay.

Read our guide to employer’s liability insurance for more detailed information.

Public liability insurance

Public liability insurance is not required by law, but if members of the public come to your premises, or could be hurt in any way by something your business does it’s probably a good idea to have a robust policy in place.

Depending on the type of business you are in, you might find that some organisations will require you to have public liability cover before giving you a contract or allowing you to operate on their premises.

For example, if you have a stand at a market, or attend a fair to sell your wares, the organisers may demand you have public liability insurance before they will allow you to attend.

A public liability insurance policy will cover you for any damages claimed, plus legal representation. You’ll find more details in our dedicated guide: what is public liability insurance? – A guide for businesses.

You can also get an instant online public liability quote from our long-term insurance partner, Qdos, specialist small business insurers.

Buildings insurance for your premises

If you own your own commercial premises, you must protect them, just as you do your home. At the most basic level, this means a business buildings insurance policy which will cover any damage to your premises in the event of a fire, flood, or some other catastrophe.

Although it’s not obligatory, it makes sense to take out cover for fixtures and fittings and any stock you might have on your premises. Most commercial property insurance policies will allow you to include these options along with the basic buildings insurance.

Motor vehicle insurance

If you operate company vehicles, you must have at least third-party insurance, and preferably fully comprehensive.

Remember employees are less likely to look after their company vehicle, so you may find yourself claiming on your policy more often than you would expect to with a private car.

Industry-specific insurance policies

If you are part of a recognised profession, check with your industry body what insurance policies they insist, or recommend you hold. For example, solicitors are required to carry an insurance policy in order to practice law.

Business insurance policies you should have

Professional Indemnity (PI) insurance

Professional indemnity, or PI insurance, gives professional businesses protection against claims made by their clients, for any damage caused by professional negligence.

You may find that this type of cover is a legal ‘must have’, particularly if you’re providing personal services to larger organisations. The terms of your contract with a third party may obligate you to take out professional indemnity insurance. The amount of cover may also be specified (e.g. £500,000, £1m, etc.)

If you’re an IT contractor or consultant, for example, PI insurance will be mandatory.

Even if you’re not required to have it by your clients, it is advisable to have professional indemnity insurance if you offer any kind of service to businesses or the public.

You’ll find more in our guide to professional Indemnity Insurance.

You can get an instant PI quote from our insurance partner, Qdos.

Director’s & Officers insurance

Director’s & Officers insurance covers the legal liabilities you have as a director of a limited company and any legal costs if you get something wrong. This type of cover is also frequently referred to as D&O insurance.

Employee travel insurance

If you require your employees to travel abroad, you should get them well insured with a reputable company that will look after them in an emergency. Remember to check their luggage, money and any laptop will be covered.

Product liability cover

If you make, repair or sell products, you could be held liable for any injury or damage caused by defects.

Pollution risk insurance

If you manufacture anything and there’s any risk you might pollute the environment, this will cover the costs of any clean up operation, plus claims against your business.

And a selection of more specific business insurance policies you could buy

Intellectual Property (IP) Insurance

Much of the value of many modern businesses is made up of intangible assets such as Intellectual Property.

If your business is innovative and relies on any patents, trademarks or designs, you might want to consider protecting yourself with Intellectual Property insurance.

Key person insurance

If your business would grind to a halt if you, or another employee, was badly injured or killed, key person insurance will protect the business against loss of revenue while a replacement is found.

Tax investigation cover

This type of insurance will protect your business in the event that HMRC investigates your tax affairs. You can protect the costs of professional representation and even cover any additional tax and penalties that are levied if you lose a case.

Find out more about tax investigation cover here.

This may be particularly useful if you provide professional services via your company. Find out more specifically about IR35 protection here.

Business continuity insurance

Also called business interruption insurance, this will protect you against any disruption that could lead to loss of revenue, such as a major catastrophe.

You should aim to cover events not already included in your other insurance policies, or where there will be a longer-term disruption (such as total loss of premises).

Trade credit insurance

Will pay out if you have a bad debt. Definitely worth looking at if you sell a small number of high value items.

Glass & sign cover

If you have a shop with a large window or expensive signage, it may not be covered by other policies if it’s destroyed by vandals.

Plant and business equipment cover

If you rely on key expensive machinery, get it insured in case it’s damaged or stolen.

Goods in transit insurance

If you shift large amounts of stock around, this will give you extra protection from accidents or theft.

Money insurance

If you hold large amounts of cash or other valuable documents, this may offer you some protection against loss or theft.

Fidelity guarantee

This cover protects your business against loss of money or stock if one of your employees is dishonest. It’s unlikely to be cost-effective until you have a significant number of employees.

Engineering insurance

Provides cover against electrical or mechanical breakdown of essential equipment.

Cyber insurance

A relatively new entrant to the insurance market, cyber cover will protect your business in the event that your IT systems are compromised by a wide variety of potential threats, such as hackers.

Read our concise guide to cyber insurance for more details.

Getting quotes and buying business insurance

It’s always a good idea to get several quotes. Many insurance websites will give you a quote if you provide some basic details about your business, with no commitment required.

And bear in mind that the cheapest quote may not be the best policy.

For a business insurance quote from our trusted supplier, try Qdos. 100s of Bytestart visitors have taken out a Qdos business insurance policy over the past 15+ years.