What types of insurance does my small business require?

If you are running a business you are legally required to take out certain insurances. Failure to do so can not only result in hefty fines but it could put your whole business at risk. Nicola Roby at CHW Small Business Accountants in Bolton highlights some of the insurances out there. Some are essential, some are advisable and there are a few others you may wish to consider.

  • Employers’ liability insurance

As soon as you take on your first employee, you are legally required to take out employers’ liability insurance. This protects your employees should they become ill or injured in the course of their work. The insurance certificate needs to be displayed in order that your employees can see it.

Employer’s liability insurance isn’t required if your limited company has only one employee, who owns 50% or more of the share capital (probably you). Further, if you are a sole trader who employs only close family members and/or no one else, you will also be exempt.

Even if you don’t have full-time employees but occasionally hire staff you might still be required to take out insurance and you can be fined up to £2,500 per day if your business doesn’t have a suitable employers’ liability policy.

  • Public liability insurance

Whilst this type of insurance is not required by law, if members of the public come to your premises, or could be hurt in any way by something your business does it’s advisable to have cover.

Depending on the nature of your business, some organisations will insist that you have public liability cover before giving you a contract or allowing you to operate on their premises.

A public liability insurance policy will usually cover you for any damages claimed, plus legal representation.

  • Buildings insurance

If you own commercial premises it’s essential that you protect them in the same way you would your home. At the most basic level, this means a business buildings insurance policy which will cover any damage to your premises in the event of a fire, flood or some other catastrophe.

It’s not obligatory but it’s sensible to insure fixtures, fittings, stock and other assets you might have on your premises. Most commercial property insurance policies will allow you to include these options along with the basic buildings insurance.

  • Car/van insurance

If you operate company vehicles, you should have third party insurance as a minimum, and preferably fully comprehensive. Unfortunately, employees are less likely to look after a company vehicle, so you may find yourself claiming on your policy more often than you would expect to with a private car!

  • Professional Indemnity insurance

This insurance gives professional businesses protection against claims made by their clients, for any damage caused by professional negligence.

Many firms, particularly larger organisations, now require their suppliers to have this type of cover before they will do business with them. It’s now common practice in many industries that professional indemnity insurance is a must-have insurance for the majority of contractors, consultants and freelancers.

  • Director’s & Officers insurance

This covers the legal liabilities you have as a director of a limited company and any legal costs if you get something wrong.

  • Employee travel insurance

Should you require your employees to travel abroad, get them well insured with a reputable company that will look after them in an emergency. Ensure their luggage, money and any laptop or other equipment is covered.

  • Product liability cover

If you make, repair or sell products, you could be held liable for any injury or damage caused by defects.

  • Pollution risk insurance

If you are in manufacturing and there’s any risk you might pollute the environment, this will cover the costs of any clean-up operation, plus claims against your business.

  • Trade credit insurance

This will compensate you in the event of a bad debt. It is worthwhile looking at if you sell a small number of high value items or rely on a small number of high volume customers.

  • Vandalism

Glass & sign cover will pay out if you have a large window or extensive signage which is destroyed by vandals. Other policies may not pay out!

  • Plant and business equipment cover

If you rely on key expensive machinery, get it insured in case in the event that it is damaged or stolen.

CHW Small Business Accountants in Bolton understand that getting the right insurances for your small business can be a minefield.  We have extensive local contacts and can point you in the right direction for advice in this area. To discuss this or any other issue relating to your small business contact the team on 01204 534031 or via our contact us page.


This article is for general guidance only. It provides an outline, and may not include points which are important to your situation. You should not depend on this blog without taking advice based on the full facts of your case. The information given was correct at the time of publication.

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