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How much is business insurance?

The factors that affect the cost of commercial cover

Article author's profile picture
Written by  Saarrah Mussa
5 min read
Updated: 18 Oct 2023

Business insurance comes in a range of varieties and levels of cover to suit different business needs. Our guide explains the factors that affect premiums so you can get a gauge of what it may cost your business.

The cost of your business insurance will depend on a number of factors, including the kind of business you run, and the sort of cover you need.

The average costs of business insurance for MoneySuperMarket customers was £97.06 a year1 however you 'premium' - the amount of money you pay for your insurance will vary depending on your exact circumstances. An insurer will calculate the cost of your premium based on a range of factors. They'll assess how likely it is that you'll make a claim, and what that's likely to cost. Therefore, riskier businesses will pay a higher premium.

1On average customers paid £97.06 annually, based on data from Simply Business October 2023

What affects the cost of business insurance?

The main factors that affect the cost of business insurance are the type of commercial insurance you choose. There is a huge range of business insurance types to support a range of different commercial needs. However the key types of insurance include:

The cost of public liability insurance

Public liability insurance protects businesses from financial losses arising from claims made by third parties for bodily injury or property damage caused by the insured's business operations or activities.

There are a number of factors that go into assessing the cost of your public liability cover including the type of business, the business structure and you claims history.

The level of risk is also an important factor. For example, if any of your usual business activities are considered risky, then you may have to pay more for your insurance. Your insurer will also take your claims history and the level of cover you need into account when calculating a price.

The amount of public liability cover you choose will also affect the cost and should depend on the nature of your business, and what your client demands are. Whenever you take on a new job or contract, it's worth checking your public liability policy. Many government contracts will expect you to be covered for a minimum of £5-10 million.

You're not required by law to have public liability insurance in place, but you may find that your clients, industry regulator or membership body require you to have it in place.

The cost of professional indemnity insurance

Professional indemnity insurance provides crucial cover for businesses that offer a professional service, handle client data or intellectual property, or give advice. It covers a wide range of risks, including unintentional breaches of copyright or confidentiality, losses of documents or data, and professional negligence.

Like most insurance, the cost of professional indemnity cover varies depending on the nature of your business. This can include your business structure, type of business, the level of cover you need, and your claims history.

The amount of professional indemnity cover you choose will depend on the kind of business you run, and whether your regulator or professional body requires you to have a level of cover in place. Some client contracts may also require you to have professional indemnity insurance too.

The cost of employers liability insurance

Employers liability insurance provides protection to employers against arising from injury, illness, or death of their employees as a result of their work. There are several factors that can affect the cost of employers' liability insurance in the UK including:

  • The nature of the business: The type of work a business does can have a big impact on the cost of employers' liability insurance. For example, a company that operates in a high-risk industry, such as construction or manufacturing, may pay more for insurance than a business in a low-risk industry like retail.

  • The size of the company: The number of employees a business has can also impact the cost of insurance. Generally, the more employees a company has, the more it will cost to insure them.

  • Claims history: If a business has a history of making claims on its employers' liability insurance, it may be seen as a higher risk and may have to pay more for coverage.

  • Health and safety practices: Insurance providers will also consider a company's health and safety practices when determining the cost of insurance. Businesses that have strong health and safety protocols in place may be viewed as a lower risk and may be able to secure lower rates.

  • Location: The location of a business can also impact the cost of insurance. For example, businesses located in areas with higher rates of accidents or injuries may be seen as higher risk and may have to pay more for insurance.

  • Level of coverage: The amount of coverage a business requires can also impact the cost of insurance. Higher levels of coverage will generally cost more than lower levels.

Employers liability insurance is a legal requirement for most businesses in the UK that employ one or more staff members so it will be a necessary cost to your business if that applies to you.

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Other factors that affect the cost of business insurance

Other factors that affect the costs of business insurance include:

  • Any previous claims you've made, particularly over the past five years

  • How long you've been working in your industry

  • Whether or not you work in a dangerous environment

  • Whether you handle dangerous or hazardous equipment

  • The value of the tools and equipment you use

  • The types of insurance you want to add to your policy

When you run a quote, it's really important to make sure that you provide accurate information about yourself and your business, so that you're protected if you need to claim.

Compare business insurance quotes with MoneySuperMarket

With such a large range of business insurance types and factors affecting the cost of premiums, finding the right policy at the right price for you can be a chore.

MoneySuperMarket makes it easy to find tailored quotes to suit your business' needs and budget. With just a few details about you and your business we compare a huge range of leading business insurance provider to show you all available quotes ordered by price helping you save time and money finding the right deal for you.

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