Kristina Fox
Since there are many types of business insurance, your policy can be as wide ranging or as focused as you choose.
Before you decide what insurance you need to protect your business, you’ll want to understand the cover types on offer. Below, we explore some common types of business insurance in detail.
» MORE: Business insurance explained
What are the different types of business insurance?
In the table below you can find more detail about the most common kinds of business insurance available and the types of risk they cover.
| Insurance type | What it covers |
|---|---|
| Public liability insurance | 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 indemnity insurance | This could pay out if a client makes a negligence claim against you because they believe they lost money because of your advice or services. |
| Product liability insurance | This could pay compensation costs and legal fees if a product you supplied made someone ill or injured them. |
| Employers' liability insurance | If an employee becomes injured, ill or, depending on the policy, dies because of work they did for you, this could cover compensation and legal costs. |
| Contents insurance | Can cover the cost of repairing or replacing stolen, damaged or destroyed equipment or stock. |
| Tool insurance | If you’re in a trade and your tools are stolen from a secure location (such as a locked garage), this could cover the cost of replacements. It may also cover damage or loss. |
| Buildings insurance | This covers the cost of repairing the business premises you own if they are damaged by an unexpected event, such as a fire, flood or storm. |
| Personal accident cover | If injury, either at work or outside the workplace, stops you or a key person (named on the policy) from working, this could offer weekly payments to make up for lost income while you recover, or a lump sum for permanent disability. |
| Business interruption insurance | This could cover some of the potential shortfall in lost gross profit if your business couldn’t trade for an extended period of time after an unexpected event, such as a flood. It could also cover increased costs to keep your business afloat during the disruption. |
| Legal costs cover | 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 | If you drive any vehicle on UK roads, you need insurance. If you use a vehicle for business purposes, you need specific business vehicle insurance or commercial vehicle insurance if driving is your main job. |
| Cyber insurance | If there was a data breach at your company or your IT systems are damaged by a cyber attack, this could cover the cost of replacements and compensation for customers affected by the data breach. |
| Director and officers insurance | This can cover claims made against directors and key managers of your company for ‘wrongful acts’, such as breaches of duty and neglect. |
What insurance do I need for my business?
There are two types of business insurance you must have by law, if they apply to you. These are:
- Employer’s liability insurance for at least £5 million, if you have employees.
- Motor insurance (at least third party) to meet traffic and road safety legislation, if you and your employees drive a vehicle on public roads for work purposes.
Otherwise, consider your main concerns, which might be anything from compensation claims to damage to business stock. The above is not an exhaustive list of cover types, and won’t necessarily all be relevant to the risks your business faces
What is and isn’t covered can vary across providers, so check the details. This includes the most the insurer would pay out (maximum limit) and how much you will pay towards a claim (excess).
Business insurance can be tricky to navigate, so ask the insurer or broker if you’re unclear about anything.
» MORE: Do I need business insurance?
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