If you’re unsure what kind of insurance your small business needs, you’re not alone.
In fact, 51% of businesses stopped buying at least one form of insurance cover.
And even when they do buy it, business owners only realise they’re underinsured when something goes wrong. Some insurance is legally required, others are optional but can still save your business from a disaster.
This guide will help you understand the different types of business insurance you need and how to choose the right policy without overpaying.
Start by understanding your risks
First things first. Before you ask what insurance you need, you should ask yourself what could go wrong.
Identifying your risks is the most important step in finding the right protection. A simple assessment can help you spot the weak points and break down the risks you face. These usually fall into three categories: physical, legal and digital.
- Physical risks include things like workplace injuries, property damage and equipment failure. If you own a shop, a flood could wipe out your stock. If you’re a builder, faulty equipment could cause a serious injury. These risks are often the most visible and usually the most expensive when they go wrong.
- Legal risks come from contracts, employment law and regulations. A customer might sue over allegedly incompetent advice. A former employee could take you to tribunal. Many of these risks seem invisible until they happen, but can cost you time and money fast.
- Digital risks are rising for every business. From lost data to ransomware attacks, even small businesses are now prime targets of cybercrime. If you hold sensitive customer information or use cloud-based services, you’re vulnerable to attacks.
It’s always worth reviewing your cover as your business changes. A policy that suited you three years ago might now leave critical gaps. Keeping your insurance up to date ensures you’re not caught out when things go wrong.
Match insurance types to your business risks
Once you’ve mapped out the risks your business faces, you can start to think about which insurance policies you need, which we can help with. Here are the main types of business insurance, what they cover and who they’re for.
1. Commercial property insurance
If you own the building your business operates from, commercial property insurance protects you against damage to the premises from unexpected events like fire, flooding or vandalism.
What commercial property insurance covers
- Repairs or rebuilding costs if your building is damaged.
- Damage from fire, storms, flooding or burst pipes.
- Vandalism or malicious damage to the building.
- Accidental damage to walls, roofs, doors and fixed structures.
This cover is essential for property owners and landlords as it can often be a key business asset.
2. Employers’ liability insurance
If you employ anyone, you’re legally required to have this cover. It protects your business if an employee is injured because of their work. This includes physical accidents and long-term health issues, most commonly as a result of trip, slips and falls in the workplace.
What employers’ liability insurance covers
- Compensation payments if an employee is injured or falls at work.
- Legal defence costs if you’re taken to court.
- Medical fees and rehabilitation expenses tied to a workplace injury.
- Incidents involving full-time, part-time, casual or temporary workers.
If you don’t have this cover when legally required, you could face fines of up to £2,500 for each day you’re uninsured. You must also display the EL certificate or risk another £1,000 fine.
It’s always worth double checking if you need it, including if you’re unsure.
