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What insurance does a new business need?

Having the right insurance coverage can protect your business from unexpected risks and legal liabilities. The specific insurance needs of your business may vary based on its size, industry, and activities. It can be helpful to consult with an insurance advisor or broker to tailor your coverage to your unique requirements. The British Insurance Brokers’ Association has an extensive directory of insurance providers who specialise in different types of businesses.

By investing in the right insurance from the outset, you can safeguard your new business from unforeseen challenges and focus on its growth and success. Below, we’ve listed some of the common insurance options to consider when launching a business.

Employers’ Liability Insurance

If you hire employees, employers’ liability insurance is a legal requirement. It covers claims made by employees who are injured or fall ill due to work-related activities. If you do not have it, you could be fined.

When you need it: If you are a business with employees, even if you have just one.

Public Liability Insurance

Public liability insurance is essential if your business brings you in contact with third parties – e.g. customers, contractors, or members of the public. It covers legal costs and compensation claims if someone is injured or their property is damaged due to your business activities.

When you need it: Restaurants, retail stores, service providers, and any business with customer foot traffic.

Professional Indemnity Insurance

Also known as PI insurance, this provides coverage if a client successfully claims that your professional advice or services led to financial losses or damages.

When you need it: It is particularly important for consultants, lawyers, accountants, and any business providing professional services.

Product Liability Insurance

If your business manufactures or sells products, this insurance safeguards you against legal claims for injuries or damage caused by defective products.

When you need it: Businesses that are manufacturers, wholesalers, retailers, and anyone involved in the product supply chain.

Property Insurance

Property insurance covers your business premises and its contents, including equipment, goods, stock, and furniture, against theft, fire, and other risks.

When you need it: Businesses with physical locations, such as offices, factories or warehouses, and particularly when these premises store valuable assets.

Cyber Insurance

This is a very specific, and relatively recent, type of insurance. In essence, cyber insurance protects your business from threats online and / or linked to data systems, such as data breaches or cyberattacks, and the associated legal and financial consequences.

When you need it: It is vital for any business that collects and stores customer data electronically.

Business interruption insurance

This insurance provides financial support when your business operations are disrupted due to unforeseen events, such as natural disasters or fires. It is worth noting that the recent Covid-19 pandemic has prompted a number of claims under Business Interruption policies, which had been contested. Keystone Law has provided a useful overview of what a recent supreme court ruling on a case means for businesses.

When you need it: Businesses reliant on physical premises and equipment.

Commercial Vehicle Insurance

If your business uses vehicles for deliveries, transportation, or any other purpose, commercial vehicle insurance is necessary to cover accidents and damages. Personal insurance will often not be valid for claims incurred while undertaking business activities.  Similar to regular car insurance, there are three levels of cover available in the UK market: Third Party Only (TPO), Third Party, Fire and Theft (TPFT) and Comprehensive. If you have more than one commercial vehicle, you can purchase a motor fleet policy, which will cover multiple vehicles.

When you need it: If your business has company-owned or leased vehicles, or if you use a privately-owned vehicle for commercial activities.

Key Person Insurance

This protects your business in the event of the illness or death of a key employee, providing funds to cover recruitment and training costs.

When you need it: If you are a business that is heavily reliant on a few key individuals (such as yourself, the business owner) who could be regarded as a critical point of failure.

Learn more

What are the legal requirements when starting a business?

Find our more about starting a business

Discover more about managing your business’ finances

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