What Insurance Do You Really Need?

Running a business comes with risks—legal claims, property damage, employee accidents, or financial losses—all of which can be costly if you’re not covered. Whether you’re a freelancer, small business owner, or growing company, having the right business insurance can protect you from unexpected expenses and legal trouble.

But which policies do you actually need, and how much should you budget for insurance?

In this guide, we’ll cover:

✅ Which types of business insurance are legally required in the UK

✅ Key policies for different industries (e.g., public liability, professional indemnity)

✅ How much business insurance costs and how to find the best deal

Let’s break it down!

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1. What Business Insurance is Legally Required in the UK?

Some types of business insurance are mandatory by law in the UK. Failing to have the required cover could result in fines or legal action.

📌 Employers’ Liability Insurance (Legally Required)

If you hire employees, you must have Employers’ Liability (EL) insurance. This covers claims if an employee gets injured or falls ill due to their work.

✔️ Legal Requirement – If you employ staff, you need at least £5 million in cover.

✔️ Penalty for Not Having It – You can be fined £2,500 per day for not having EL insurance.

✔️ Exceptions – Sole traders with no employees do not need this policy.

🔗 Learn more: Gov.uk

📌 Commercial Motor Insurance (Legally Required)

If your business owns and uses vehicles, you must have at least Third-Party motor insurance.

✔️ Covers damage to other people’s vehicles and property.

✔️ Required whether you use vehicles for deliveries, client visits, or transport services.

✔️ Penalty – Uninsured business vehicles can lead to fines, points on your license, or even vehicle seizure.

🔗 Learn more: Gov.uk

💡 Pro Tip: Even if not legally required, other types of insurance can save your business from major financial risks.

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2. Key Business Insurance Policies for Different Industries

Beyond legal requirements, different industries face different risks. Here are the most important business insurance policies depending on the nature of your work:

 

📌 Public Liability Insurance (For Businesses Dealing with the Public)

Covers claims from customers or the public if they get injured or their property is damaged due to your business activities.

✔️ Best for: Retailers, tradespeople, cafes, event organisers.

✔️ Example: A customer slips on a wet floor in your shop and sues you for medical costs.

✔️ Cost Estimate: Starts from £5-£10 per month, depending on coverage level.

 

📌 Professional Indemnity Insurance (For Service-Based Businesses)

Protects against claims of professional mistakes, negligence, or bad advice.

✔️ Best for: Consultants, accountants, lawyers, marketing agencies, architects.

✔️ Example: A client sues you for financial losses due to incorrect advice or an error in your work.

✔️ Cost Estimate: Around £10-£50 per month, based on profession and risk.

 

📌 Business Interruption Insurance (For Businesses That Rely on Physical Premises)

Covers lost income if your business can’t operate due to unforeseen events like fire, floods, or a major supply chain issue.

✔️ Best for: Restaurants, manufacturers, retail stores.

✔️ Example: A flood damages your shop, forcing you to close for repairs. This insurance helps cover lost income.

✔️ Cost Estimate: Typically £20-£100 per month, depending on the size of the business.

 

📌 Cyber Insurance (For Businesses Handling Customer Data Online)

Protects against data breaches, cyberattacks, and online fraud.

✔️ Best for: Tech startups, eCommerce businesses, companies storing customer data.

✔️ Example: Your website is hacked, and customer payment details are stolen. This insurance helps with legal costs and compensation.

✔️ Cost Estimate: Typically £5-£50 per month, depending on the risk level.

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3. How Much Does Business Insurance Cost & How to Find the Best Deal?

Business insurance costs vary based on:

📌 Industry & Risk Level – Higher-risk industries (e.g., construction, healthcare) pay more.

📌 Business Size & Revenue – Larger businesses typically need higher coverage limits.

📌 Coverage Amount – The more coverage you need, the higher your premium.

📌 Average Costs of Business Insurance in the UK

 

 

📌 How to Find the Best Insurance Deal

✅ Compare Providers – Use comparison sites like Compare my insurance, Simply Business, MoneySuperMarket, or Compare the Market. 

✅ Bundle Policies – Many insurers offer discounts if you buy multiple policies together.

✅ Adjust Your Excess – Increasing your excess (the amount you pay before insurance kicks in) can lower premiums.

✅ Check Reviews – Look for customer feedback and claim response times before choosing an insurer.

✅ Review Annually – Your business changes, so update your insurance coverage yearly to match your current needs.

💡 Pro Tip: Some industries require minimum coverage levels, so check with trade associations or professional bodies for recommendations.

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Final Thoughts

Choosing the right business insurance is about balancing protection and affordability.

✅ Legally Required: Employers’ Liability and Commercial Motor Insurance.

✅ Highly Recommended: Public Liability, Professional Indemnity, and Cyber Insurance.

✅ Industry-Specific: Product Liability and Business Interruption Insurance.

By investing in the right coverage, you protect your business, clients, and employees from financial risks, giving you peace of mind to focus on growth.

💬 What type of insurance does your business have? Drop a comment below!