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Getting small business insurance
Business advice

Getting small business insurance

12 February 2021

4 min read

No one goes to sleep at night dreaming of small business insurance, but in reality, the future is uncertain, and accidents could happen. But is business insurance actually required, and what kind of protection could you expect in exchange for paying your premiums? We’ll explain how to get small business insurance – and more – in this guide.

What is business insurance?

Business insurance refers to any policy that could protect your company financially if something goes wrong. And let’s face it, there’s a lot that could go wrong when running a small business, from deliveries getting damaged in the post, to more serious incidents like a customer being injured on your premises. Later, we’ll explore some of the types of business insurance you might need.

Is business insurance legally required?

The only type of business insurance that is legally required is Employers’ Liability (EL) insurance. This is compulsory for any business that employs staff, whether on a permanent or casual basis. Your business risks being fined if you don’t have EL insurance in place, and the policy must cover your business for up to £5 million.

What does small business insurance cover?

Aside from the compulsory Employers’ Liability insurance, there are many different types of small business insurance you may want to consider. Here, we explain what these business insurance policies could cover.

Professional indemnity insurance

This type of small business insurance could give you financial protection if a client seeks compensation as a consequence of your work; for example, if you’ve made a mistake or if the work is considered poor quality. A professional indemnity or ‘PI’ insurance policy might cover:

  • Legal costs if a customer takes you to court for financial losses they’ve incurred
  • Financial assistance if you unintentionally breach a contract
  • Money if the customer refuses to pay your invoices.

Public liability insurance

You may wish to insure your business with public liability (PL) insurance, which could cover you if a member of the public is injured on your premises, or if you damage a customer’s property or equipment. Here are some examples of what PL insurance might cover you for:

  • Compensation claims if someone is injured at the workplace
  • Cost of repairs if you’ve caused damage as a result of your business activity
  • Legal costs to cover legal action brought by a customer.

Contents insurance

Whether it’s tools, computers or machinery, there are some types of equipment that many businesses simply can’t do without. And while you may not be taking your laptop to the beach, small business contents insurance could provide some peace of mind regardless of your working practices. Here are some features that contents insurance for businesses may cover:

  • Cover for your valuables in the event of accidental damage
  • Financial cover if your equipment is stolen
  • Claim for data recovery costs; for example, if your hard drive is broken.

Do I need business insurance?

Every business is different, and different insurance policies may appeal to some businesses more than others. While professional indemnity insurance is not required by law, some clients may insist you have this type of business insurance in place, and depending on which industry you operate in, PI insurance may be a regulatory requirement. Accountants, dentists and salon owners are just some of the professionals who may take out PI insurance, given that one mistake in a setting like a dentists or beauty salon, could lead to a serious complaint.

If your business has regular contact with the public, such as pubs, bars and coffee shops, or you’re a tradesperson who visits a customer’s home, then public liability insurance may be advisable. That’s because there may be a higher likelihood of accidents like spills and trips in a busy environment, which PL insurance could protect against.

And if your business activity involves valuable equipment – from laptops and tablets to snazzy card machines – then contents insurance is something you may wish to consider too.

You can read more about the types of business insurance you might need in this Companies House blog.

How much is small business insurance?

You could get small business insurance such as public liability cover and contents insurance for a few pounds a month, while professional indemnity cover may often cost a little more – perhaps in the region of £14 a month based on figures from insurance broker With Jack. However, every business will have different insurance needs and your quote may depend on the risks associated with the day-to-day running of your company.

How to get small business insurance

While there are many small business insurance providers on the market, perhaps a good starting point is to search the Financial Conduct Authority (FCA)’s register for an authorised insurer. You could alternatively find an insurance broker through the British Insurance Brokers’ Association. It’s often a good idea to shop around, get quotes and check out public reviews before you choose an insurer. You may also be able to speak to an insurance specialist about your business’s specific needs.

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Disclaimer

This has been prepared by Tyl by NatWest for informational purposes only and should not be treated as advice or a recommendation. There may be other considerations relevant to you and your business so you should undertake your own independent research.

Tyl by NatWest makes no representation, warranty, undertaking or assurance (express or implied) with respect to the adequacy, accuracy, completeness, or reasonableness of the information provided.

Tyl by NatWest accepts no liability for any direct, indirect, or consequential losses (in contract, tort or otherwise) arising from the use of the information contained herein. However, this shall not restrict, exclude, or limit any duty or liability to any person under any applicable laws or regulations of any jurisdiction which may not be lawfully disclaimed.

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