What are the different types of business insurance?
There are a lot of different business insurance products available to protect many different aspects of your business, but you don’t have to buy them all to have the right protection. In our guide, we’ll explain your options and help you choose the ones that are right for you.
Key takeaways
Business insurance includes public liability, product liability, and professional indemnity. Employers' liability is legally required if you have employees.
Businesses can also consider business contents insurance, business buildings insurance, and business interruption insurance.
Business insurance can be customized based on industry-specific risks and requirements.
What are the different types of business insurance?
Public liability insurance
Public liability insurance is designed to protect you if someone claims that you are liable for property damage or injury. It will cover the legal costs associated with fighting the claim and if you are found liable it will also cover compensation payments to the claimant.
Product liability insurance
Product liability insurance works similarly to public liability insurance but will cover you specifically if a defective product that you have sold to the public has caused property damage, injury, illness, or death. Even if you didn’t manufacture the product, you can still be held liable.
This insurance will cover your business’s legal fees and compensation payments related to the incident.
Professional indemnity insurance
Professional indemnity insurance will protect your business from claims that your services or advice that you have given to your clients have resulted in a financial loss. This specifically covers claims of negligence or error, not malicious sabotage or a failure to fulfil contractual obligations.
Professional indemnity insurance can also protect your business if a defamation claim is made against you and cover the cost of compensation payments.
Employers’ liability insurance
This type of insurance is a legal requirement in the UK if have employees, whether they are full or part-time workers. Your business can be fined as much as £2,500 every day you aren’t properly insured.
Employers’ liability insurance will cover compensation payments and legal fees if an employee makes a compensation claim for a work-related injury or illness.
Business contents insurance
Business contents insurance will protect the contents of your business premises against incidents such as floods, fires, or theft. If your business contents are lost or damaged as a result of an insured event, your policy will cover the cost of repairing or replacing them.
This type of insurance can protect all types of contents, regardless of what type of business you own – whether it’s office equipment, machinery, shop decorations, or furniture.
Business buildings insurance
Also known as commercial property insurance, business buildings insurance would only be appropriate for you if you own the building that your business is using. If you rent a space, it would be the responsibility of the building owner to provide this type of insurance protection and cover any structural damage to the building.
If you do own your business building – whether it’s a warehouse, office, or commercial space – business building insurance will protect the building against damage caused by flooding, fire, or theft.
Business interruption insurance
If an unexpected event prevents your business from operating temporarily, business interruption insurance can temporarily cover you for the loss of income. Most policies will cover incidents related to damage caused by fire, flooding, or storms as well as breakdowns of essential equipment.
The policy will supplement a proportion of your lost income until you start operating again or until you reach your claim limit.
Personal accident insurance
Personal accident insurance can be used to protect you, business partners, or employees against bodily injury as a result of an accident. The accident doesn’t need to happen at work or as a result of work for it to be covered by the policy.
If a person covered by personal accident insurance is involved in an accident and is seriously injured, insurance will provide them compensation and provide a range of benefits to help them during recovery.
Key person insurance
Key person insurance is a type of life insurance that will cover key persons within your business. These are people who are integral to your day-to-day operations and without whom your business would suffer.
If this person passes away, the insurance policy will pay out a lump sum to the business to help your business survive the loss and recover.
Are there types of business insurance for specific businesses?
You won’t find unique business insurance policies for specific businesses. However, business insurance policies and their add-ons can be adjusted and tailored to match the needs of your business.
There are certain types of business insurance cover that may be more relevant to you than others. To help you decide what kind of cover is right for you, you can check out the following pages for more information:
How do I know which insurance I need?
The right business insurance protection will depend on the needs of your business and your budget. Certain industries may require or be better suited to certain insurance types than others.
For example, there are many trades that deal with the public that require public liability insurance to operate. While this insurance wouldn’t be a legal requirement, not having this insurance can prevent you from taking your business to certain venues or working with other businesses.
The only type of business insurance we would say you need is employers’ liability insurance. This insurance is a legal requirement to have in the UK if you have any employees and an important protection to have. It will cover people that work for you regardless of whether they’re part time, volunteers, contractors, or even family members.
Do I need business insurance if I work from home?
Yes, even if you work from home, you will still need certain business insurance. Regardless of whether you work in an office or from your sofa at home, if you have hired any employees for your business, you are legally required to have employers’ liability insurance.
Certain industries will also require some level of public liability or professional indemnity insurance in order for you to operate, regardless of your business location.
It’s important to also be aware that most personal insurance products will not cover your business. Home insurance, for example won’t cover damages to any items in your house that belong to your business. You can also invalidate your car insurance policy if you don’t inform your insurer that you are using your car for work.
How to compare business insurance?
The easiest way to compare business insurance quotes is online. Rather than buying each business protection type separately, you can bundle them together, with public liability insurance, professional indemnity insurance, or employers’ liability insurance at the centre. It’s quick, easy, and it can save you money.
