Small Business Insurance - What Do I Need?

Whether you’re just starting out, or looking to expand your small business, it’s important to make sure that, in the event that something goes wrong for which you may be liable that you have adequate insurance to protect your business.

However, with so many different types of business insurance on offer, it can be complex for small business owners to work out what type of insurance they need, and whether it’s relevant. We explore some of the most common types of business insurance and uncover when and why you might need them.

Do I need business insurance?

The likely answer is yes. However, there is no such thing as just “business insurance”. There are various types of insurance, all of which may or may not be applicable for your business. For example, if you employ staff, it’s a legal requirement to have employers liability cover, however, if you’re a one man band, then there’s no need.

Take a look at the insurance types below to get an idea of which business insurance cover is likely to be needed for your organisation.

Public Liability Insurance

Most business owners and their teams will come into contact with members of the public, be they clients, suppliers or other third parties throughout the course of their work. Public liability insurance protects your business against claims for compensation made by anyone who may be injured or suffers a loss in connection to your business.

While this is particularly relevant if you offer services directly to the public, those who work from a home-based office should not overlook public liability insurance. For example, if you meet with a client who then trips over your laptop lead, leading to an injury, are you covered?

Depending on the type of business you have, it may also be a condition of your client contracts that you have are covered up to a certain amount, so check your contracts before taking out cover, and ensure that you match their requirements.

Employer’s liability insurance

Employer’s liability insurance is designed to protect the people who work for you, ensuring that you have cover to pay damages should an employee be injured, become ill or suffer damage as a result of working for you.

In most cases having employer’s liability insurance is actually a legal requirement, and unless you don’t have any employees, you are highly likely to require cover. It’s also a requirement that you display a copy of the certificate of insurance someone where your employees can easily see and read it – so no hiding it away in a desk drawer.

Do I need professional indemnity insurance?

If you run a business which offers professional advice or services to other businesses or handles things like client data, a mistake could be incredibly costly, so it can well be worth taking out professional indemnity insurance.

For example, if you offer incorrect advice or a service which is defective to your client, you could be liable for any loss to their business.

Certain professions require professional indemnity insurance as part of their industry body regulations, for example, those working in architecture, as a barrister or in accountancy.

Product liability insurance

If you sell products, taking out product liability insurance is a good idea, as this covers you in the event that a faulty or damaged product injures or otherwise damages a member of the public. And it’s not just for those who manufacture the products – in certain circumstances a reseller you can still be held liable.

While not a legal requirement, if you manufacture products, many suppliers, distributors or retailers with whom you work may require you to have product liability insurance before they work with you.

So whether you sell online, or from a retail store, product liability insurance is definitely something to consider.

Business Buildings & Contents Insurance

In the event that you own your premises, buildings insurance for your business is generally not just wanted, it’s usually mandatory. In terms of your business premises, it works in a similar way to home insurance in that both buildings and contents insurance are required. 

However, if you rent an office space, the buildings insurance is generally included, however, it’s worth speaking to your commercial lettings agent about what is covered.

Business contents insurance generally covers the items within your business such as equipment, furnishings and interior décor. Office insurance can be vital to protect you from things like accidental damage and also theft.

Legal Insurance

Business legal protection insurance which can also be known as business legal expenses insurance - covers your commercial legal expenses and provides protection against the potential costs of legal action brought by or against your business which is not covered by other insurances.

For example, covering the cost of HMRC tax investigations,  a civil action by a member of the public, or an employment tribunal. 

So, What Insurance Do I need For My Business? 

With the above insurances in mind, it can be worth drafting out scenarios where you may need one of the above insurances. For example, you may currently not sell products or have employees, so you can be pretty sure that you don’t need these types of cover. However make sure to plan for the future too, and build in the costs of insurance into your business plan. 

The type of cover you will need may vary too, and the amount you need to insure is likely to depend on your business type. However, for some insurances, the legal costs in the event that you cause injury or damage tend to be the same no matter the sector. 

Do always check any client contracts too. Often it’s a requirement that you have certain types of insurance at specific levels, so make sure that you are complying with any terms stated in the contacts.