Running a small business in the UK comes with financial risks. Business insurance helps protect you from claims, damage, and unexpected costs. The good news is that you can find affordable cover if you know what to look for.
What Business Insurance Covers
Business insurance helps protect your company from legal and financial losses. Here are common types you may need:
Public Liability Insurance
Covers injury or property damage caused by your business. This is one of the most common covers for UK small businesses.
Employers’ Liability Insurance
A legal requirement if you hire anyone. This includes part-time workers, apprentices, or volunteers.
Professional Indemnity Insurance
Useful if you give advice or provide services. It protects you from claims about mistakes or poor work.
Property Insurance
Covers buildings, stock, equipment, and business tools.
Cyber Insurance
Helps with costs from a cyber-attack or data breach.
Directors & Officers Insurance
Protects business owners or directors from claims made against their decisions or actions.
What Affects the Cost of Business Insurance
Insurance costs vary based on several factors:
1. Type of Business
High-risk trades usually pay more than low-risk service-based businesses.
2. Cover Limits
Higher cover limits increase the price.
3. Number of Staff
More employees mean higher risk and higher premiums.
4. Location
Areas at greater risk of theft, flooding, or accidents may cost more.
5. Claims History
A recent claim can increase your premium.
6. Payment Choice
Annual payments are often cheaper than monthly instalments.
Typical Costs for Small UK Businesses
Here is a simple breakdown of what many UK small businesses pay:
- Public Liability Insurance: Often between £50 and £500 per year.
- Employers’ Liability Insurance: Starts around £90+ per employee.
- Professional Indemnity Insurance: Can range from £50 to £1,000+, depending on the service you offer.
- Business Package Policies: Some providers offer combined cover from around £5 per month.
These figures vary, but they help you set realistic expectations when comparing quotes.
Legal Requirements for UK Businesses
Only a few types of insurance are legally required:
Employers’ Liability Insurance
If you employ anyone, even part-time or temporary, you must have this cover. The law allows large fines if you fail to hold a valid policy.
Motor Insurance
If your business uses vehicles, you must have at least third-party cover.
Other types like public liability and professional indemnity are recommended but not required unless a client or regulator requests them.
How to Find Affordable Business Insurance
Here are practical steps to reduce your insurance costs:
Compare Multiple Quotes
Different insurers price risk differently. Checking several options helps you find the best rate.
Only Pay for What You Need
Avoid unnecessary extras. Make sure every part of your policy matches your real risks.
Bundle Covers
Some insurers offer discounts when you combine liability, property, and other add-ons.
Increase Your Excess
A higher excess often lowers the premium, but make sure it’s still affordable.
Review Your Policy Each Year
Your business may grow, shrink, or change. Reviewing your cover yearly keeps you from overpaying.
Use a Specialist Broker
If your business is niche, a broker can help find more accurate and often lower-cost cover.
Pay Annually
Paying yearly instead of monthly can save you money over time.
Frequently Asked Questions
Can I get insurance for a short project?
Yes. Some insurers offer short-term or event-based cover, but sometimes a full annual policy gives better value.
Is cheap liability cover enough?
It depends on your work. Very low-cost cover may come with low limits or high excess. Always check what is included.
Do I need professional indemnity?
If you give advice, design, or handle important client work, you should consider it. Some industries or clients may require it.
How much employers’ liability cover do I need?
Most policies offer £5 million or more, which meets the legal requirement.
Do small online businesses need cyber insurance?
If you store customer data or take online payments, cyber cover can help you reduce financial risk from attacks.
Final Thoughts
Affordable business insurance is possible when you understand your real risks and compare options carefully. Focus on the covers you need, review your policy each year, and shop around to get the best price. With the right approach, you can protect your business from unexpected costs without going over budget.
