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
There are many different types of business insurance, including public liability insurance, professional indemnity insurance, and employer’s liability insurance
Business insurance policies can be adjusted and tailored to match the needs of your business
Comparing business insurance online and bundling protection types together into a single policy can save you money
What are the different types of business insurance?
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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 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’ legal fees and compensation payments related to the incident.
Professional indemnity insurance will protect your business from claims that services or advice 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.
Employer’s liability insurance is a legal requirement in the UK if you 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 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.
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.
If an unexpected event prevents your business from operating temporarily, business interruption insurance can 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 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 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.
Public liability insurance
Product liability insurance
Professional indemnity insurance
Employer’s liability insurance
Business contents insurance
Business buildings insurance
Business interruption insurance
Personal accident insurance
Key person insurance
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 your needs.
Some types of business insurance might 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 that is legally required in the UK is employer’s liability insurance. Most businesses that have employees must purchase employer’s liability insurance. It will cover people that work for you regardless of whether they’re part time, volunteers, contractors, or even family members.
