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Not financial advice: this page is general information to help you understand your options. It is not financial, tax, legal or insurance advice, and we don’t offer or arrange credit or insurance. Check the linked official pages and speak to a qualified adviser about your situation.
This page explains business insurance in plain English so you know what to ask about. It is information only. We don't sell, arrange or recommend insurance, and there are no affiliate links on this page. Always check that a firm is authorised before you buy.
What's compulsory?
- Employers' liability insurance: if you employ people, you must usually have it as soon as you become an employer. Cover must be at least £5 million and come from an authorised insurer. You can be fined £2,500 for every day you aren't properly insured, and £1,000 if you don't display the certificate or refuse to make it available to inspectors. You may be exempt if you only employ family members, or if your staff are based abroad. Source: GOV.UK: Employers' liability insurance.
- Motor insurance: any vehicle used on the road must be insured, and business use usually needs the right class of cover. Tell your insurer you use the vehicle for work. Source: GOV.UK: Vehicle insurance.
- Professional rules: some professions and regulators require professional indemnity insurance. Check with your trade or professional body.
Common types of cover (optional, but worth understanding)
| Cover | What it's for | Often considered by |
|---|---|---|
| Public liability | Claims from members of the public for injury or damage caused by your business | Trades, cleaners, events, shops, anyone working at customers' premises |
| Professional indemnity | Claims that your advice or work caused a client a financial loss | Consultants, designers, accountants, IT, coaches |
| Product liability | Claims that a product you made or sold caused injury or damage | Product makers, importers, food businesses |
| Business contents, stock and equipment | Theft or damage to your tools, stock and equipment | Most businesses with physical stuff; check if home insurance covers business items (it often doesn't) |
| Business interruption | Loss of income if you can't trade after an insured event | Businesses with premises |
| Cyber | Data breaches, hacking and recovery costs | Businesses holding customer data or taking payments online |
| Goods in transit | Items damaged or lost while being moved | Couriers, sellers delivering goods, removals |
Working from home
If you run your business from home, tell your home insurer. Standard home policies may not cover business equipment, stock or visitors, and not telling them could affect a claim.
How to buy insurance safely
- Check the firm is authorised. Insurers and brokers selling to UK customers must be authorised by the Financial Conduct Authority (FCA). Search the FCA Financial Services Register.
- Consider a broker if your business is unusual. Brokers can compare policies and explain exclusions. The British Insurance Brokers' Association (BIBA) has a "find insurance" service: BIBA: Find an insurance broker. BIBA also has guidance on employers' liability: BIBA: Employers' liability insurance.
- Read what's excluded, the excess, and limits of cover. Make sure the policy describes your actual business activity correctly.
- Be honest on the proposal. Wrong information can mean a claim is refused.
- Review every year as your business grows: new staff, new premises, new services.
If something goes wrong
If you have a complaint about an insurer or broker, complain to the firm first. If you're not happy with the answer, small businesses can often take it to the Financial Ombudsman Service. If an authorised insurer fails, you may be protected by the Financial Services Compensation Scheme: FSCS: Check your money is protected.
Keep records
Keep your policy documents, certificates and renewal dates with your business records. If you employ people, display (or make available) your employers' liability certificate. Business insurance premiums are normally an allowable business expense; see GOV.UK: Business records if you're self-employed.
Related
- Our HR & payroll page: first-employee checklist
- Our legal setup guide
- GOV.UK: Set up a business
Information only. This page is not insurance advice, and we are not authorised to give it. We have no commercial relationship with any insurer or broker.
Questions to ask an insurer or broker
- Are you authorised by the FCA? What is your firm reference number?
- Does the policy cover the exact activities I do, including work at customers' homes or premises?
- What is excluded, and what is the excess for each type of claim?
- Are my tools, stock or equipment covered away from my premises and in my vehicle?
- Is cover for the full year, and can I pay monthly? Is there a charge for paying monthly?
- What happens if I take on staff or my turnover grows during the year?
Keep costs sensible
Don't buy cover you don't need, but don't under-insure either. Compare like for like (the same limits, excesses and exclusions), not just the headline price, and review your cover at every renewal rather than letting it roll over automatically.
Official sources
- GOV.UK: Employers' liability insurance
- GOV.UK: Vehicle insurance
- FCA Financial Services Register
- BIBA: Find an insurance broker
- BIBA: Employers' liability insurance
- FSCS: Check your money is protected
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Last checked 29 October 2026. Spotted something out of date? Let us know.