Business insurance isn’t the most exciting part of running a company, but it’s one of the most important. The right cover protects you from risks that could otherwise derail your plans or drain your cash.

This guide explains what business insurance is, the main types available and how to decide what your business actually needs.

What is business insurance

Business insurance is designed to protect your company against financial loss if something goes wrong. That might be damage to property, a claim from a customer or a problem involving an employee.

Instead of covering personal risks in the way that home or travel insurance does, business insurance focuses on the risks that come with running a business.

Why business insurance matters

Running a business always involves some level of risk. Accidents happen, mistakes get made and unexpected events can interrupt trading.

Insurance helps you:

• Cover legal costs if someone makes a claim
• Repair or replace damaged equipment
• Protect against loss of income after disruption
• Meet legal requirements where necessary

Without cover, those costs fall directly on your business.

Common types of business insurance

There isn’t one single policy that covers everything. Most businesses choose a combination depending on how they operate.

Public liability insurance protects you if a member of the public is injured or their property is damaged because of your business activities.

Employers’ liability insurance is usually a legal requirement if you employ staff. It covers claims made by employees who are injured or become ill as a result of their work.

Professional indemnity insurance protects businesses that provide advice or services. It covers claims of negligence, errors or omissions.

Business contents or equipment insurance covers tools, stock and equipment against theft or damage.

Not every business needs all of these, but most need at least one.

Legal requirements

If you employ staff in the UK, employers’ liability insurance is generally required by law. You must have a minimum level of cover and display your certificate where employees can see it.

Other types of insurance aren’t always mandatory, but clients or contracts may require you to have certain cover in place.

How much cover do you need?

The right level of cover depends on your industry, turnover and risk profile.

Higher risk businesses, such as those working on client sites or handling expensive equipment, often need higher limits. Lower risk service businesses may need less, but still benefit from protection.

It’s important not to underinsure. If cover is too low, you could still face significant costs after a claim.

Cost and choosing a provider

Insurance premiums vary depending on the type of business, claims history and level of cover.

When comparing policies, look beyond the price. Check what’s included, what’s excluded and how claims are handled. A cheaper policy isn’t helpful if it doesn’t cover the risks you actually face.

Business insurance isn’t about expecting the worst. It’s about protecting what you’ve built so that one setback doesn’t undo years of work.