Types of Business Insurance
Business insurance can include a wide range of products, from public liability insurance to cyber cover. Find out what’s available to protect your small business.
Since there are many types of business insurance, your policy can be as wide ranging or as narrow as you choose. And though there will be similarities between what’s on offer, it is up to you to pick and choose the products and level of cover that make most sense for your business needs.
Before you can design your own business insurance package, it’s important to understand the insurance products on offer, and whether they may be relevant to you as a business owner. Below, we explore some common types of business insurance in more detail.
» MORE: Business insurance explained
What are the different types of business insurance?
You can generally place all business insurance policies into three categories, depending on who they are designed to protect: first party, third party, or both.
- First party policies cover your business costs, such as replacement tools or payments to cover lost income while unable to trade.
- Third party policies cover members of the public, for example if they were injured because of your work and claimed compensation. Some policies cover both first and third party risks.
» MORE: Do I need business insurance?
In the table below you can find more detail about the most common products available and the types of risk they cover.
|Insurance type||First or third party?||Description|
|Public liability insurance||Third||This can cover you if a member of the public gets injured,ill or dies or their property is lost or damaged because of your work.|
|Professional liability insurance||Third||If a client makes a negligence claim against you because they believe they lost money because of your advice or services, this could pay out.|
|Product liability insurance||Third||This could pay out if a product you supplied (whether you manufacture it or not) made someone ill or injured them.|
|Employers’ liability insurance||Third||If one of your employees got injured, fell ill or, depending on the policy, died because of work they did for you, this could cover the cost of paying compensation and legal costs.|
|Contents insurance||First||This policy could cover the cost of repairing or replacing your equipment if it was stolen, damaged or destroyed in an event such as a fire or flood. Any stock you store at your business premises can also be included in the cover.|
|Tool insurance||First||If you work in a manual trade and your tools were stolen from a secure location (such as a locked garage), this could pay out to cover the cost of replacements. It may also cover damage or loss.|
|Buildings insurance||First||This could cover the cost of repairing the business premises you own if they were damaged by an event, such as a fire, flood or storm.|
|Personal accident cover||First||If injury, either at work or outside the workplace, stops you or a key person (named on the policy) from working, this policy could offer weekly payments to make up for your lost income while you recover or a lump sum for permanent disability, including your beneficiaries if you were to die as a result of an accident.|
|Business interruption insurance||First||This could cover some of the potential shortfall in lost gross profit if your business couldn’t trade for an extended period of time because of an unexpected event, such as a fire or flood. It could also cover increased costs to keep your business afloat during the disruption.|
|Legal costs cover||First||Fighting a claim made against you can be costly. This policy can cover your legal fees when contesting a claim in court.|
|Business car insurance or van insurance||Both||If you drive any vehicle on UK roads, you need insurance. However, if you use a car or van for business purposes, you need specific business vehicle insurance. You will need commercial vehicle insurance if driving is your main job.|
|Cyber insurance||Both||If there was a data breach at your company or your IT systems were damaged by a cyber attack, this policy could cover the cost of replacements and compensation for customers affected by the data breach.|
|Director and officers insurance||Both||This policy can cover claims made against the directors and officers of your company for ‘wrongful acts’, such as breaches of duty and neglect.|
This is not an exhaustive list of policies, nor will all of these policies be relevant to every type of business. For more detailed information, it’s worth talking to your current insurer or checking out the insurance products available when you compare business insurance quotes.
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Kristina is a writer at NerdWallet. A recent graduate trading French for finance, she has experience creating content for student newspaper Cherwell and an edtech company. Read more