How do I get commercial insurance?

From hiring employees to devising a marketing plan, there’s a lot to think about when it comes to running your own business. Buying the right insurance is one of the most important things to consider, …

From hiring employees to devising a marketing plan, there’s a lot to think about when it comes to running your own business. Buying the right insurance is one of the most important things to consider, but it can be complicated because there are many different types of cover that come under the commercial insurance umbrella.

Also known as ‘business insurance’, commercial insurance protects your equipment, stock and business premises against things like theft and damage, as well as loss of money in the event that your business is unable to operate. It’s also there to protect you, your employees and the general public for things like injury and legal costs. Some of the different types of commercial insurance include employers’ liability cover, public liability cover, professional indemnity insurance, commercial vehicle insurance, product liability insurance and commercial property insurance.

The type of cover you need will depend on the type of work you do, how you carry out your operations and whether or not you employ staff. Assessing your potential risks and tailoring your commercial insurance to suit your specific requirements is essential for ensuring you have the right cover. It’s wise to think about how much you could afford to cover if you weren’t insured and something were to go wrong.

In this guide, we’ll explain how to go about getting commercial insurance and take you through what your options are so that you can make an informed decision and have peace of mind that you’re protected against every eventuality.

How do I get commercial insurance?

There are various ways to get commercial insurance — such as using a price comparison website or doing your own online research — but the best way is to go through an insurance broker.

This is because they’ll discuss your requirements with you, so you can be confident you’re covered for everything you need, and they’ll find you the best deal by contacting a range of providers on your behalf.

Continue reading to find out more about commercial insurance and what the different types of cover are.

What is the meaning of commercial insurance?

Commercial insurance is designed for business owners to protect their companies against financial loss. Having commercial insurance provides reassurance that should the worst happen, your costs will be covered and your business will get back up and running quickly.

Every business is unique, which is why there are many different types of commercial insurance cover (we’ll go into these in detail later). Some will be relevant to your business and others won’t, so you have the option to pick and choose what to include on a single commercial insurance policy, or you can buy separate policies based on the types of risk your business faces.

When deciding on the type of commercial insurance you need, some questions to ask yourself are:

  • Do I employ people to work for me?
  • Do I deal with members of the public?
  • Do I use a work vehicle?
  • Do I have business premises?
  • Do I have stock or work equipment, like machinery and tools?

When do I need to get commercial insurance?

When you apply for commercial insurance, you won’t usually need to provide business registration numbers, which means you can buy insurance even before you start trading.

Some businesses, like market traders, pubs and taxi drivers, need trade licences but, again, you can buy commercial insurance without this. Take note, though, that your insurer might not pay out if you begin trading and make an insurance claim before your licence is in place.

Some of the things your broker or provider will want to know include:

  • The type of business you have (for example, whether you’re a limited company or a sole trader)
  • Your actual or projected turnover
  • Your business address

What are the most common types of commercial insurance?

Some of the most common types of commercial insurance are as follows:

Employers’ liability insurance

If you employ anyone who is not a member of your direct family, the law requires you to have employers’ liability insurance. This applies even if you employ temporary or casual staff.

This type of commercial insurance covers you for claims made by an employee who’s been injured or taken ill as a result of working for you.

How much employers’ liability insurance you need will depend on the size and type of business you have. You’ll usually need at least £5 million to comply with the law. However, most insurers offer £10 million as standard.

Public liability insurance

If a member of the public is injured or killed, or their property is damaged as a result of your business, public liability insurance will cover you for any claims made against you. Most policies will also cover you for unexpected, accidental incidents that happen on your premises or off-site, such as at a client’s office. It doesn’t, however, cover your employees. You will need employers’ liability insurance for this.

While public liability insurance is an obvious choice for restaurant owners, hairdressers, shopkeepers and tradespeople such as builders, plumbers and carpenters, if you deal with the public at any point, it might be a good idea to consider taking out this type of commercial insurance.

Commercial vehicle insurance

If you drive a car, van, truck or lorry for work, you’ll need to buy a commercial vehicle insurance policy. 

This is sometimes known as business vehicle insurance, and third-party cover is the minimum required by law. 

It covers a wider range of uses than what’s included with standard vehicle insurance. A standard vehicle insurance policy only covers your commute, so if you’re using your vehicle for anything other than driving to your single place of work, you’ll need this type of insurance. As well as protecting third parties in the event of an accident, commercial vehicle insurance is designed to ensure your business can continue to operate. Most policies will also include cover for your tools and equipment as standard, but if you’re unsure, check with your broker or insurer. If you use your vehicle in a private capacity, be sure to check that your policy includes this too.

Without the right insurance, not only will you not be able to make a claim following an accident, but you might also be committing an offence.

Commercial vehicle insurance is designed to cover:

  • Delivery vans
  • Driving instructors
  • Fleets of two or more vehicles
  • HGVs
  • Minibuses
  • Taxis

It’s worth bearing in mind that if your employees drive their own vehicles for work, you’re not responsible for their insurance, but you must make sure they have it.

Professional indemnity insurance

If you provide a service based on skills, knowledge or advice, a client could make a claim for financial losses resulting from the work you did for them. Professional indemnity insurance protects you against this.

It covers your legal costs and compensation pay-outs to a client, but not all policies include financial loss they experience as a result of your negligence or mistakes you’ve made. It’s important to check exactly what’s included, as exclusions can also include things like losses due to a computer virus.

Professional indemnity insurance may be required in order to become a member of a professional body. Some examples of those who might need this type of commercial insurance are solicitors, financial advisors, accountants, architects and healthcare professionals.

What other types of commercial insurance should I consider?

Some of the other types of commercial insurance to consider include the following:

Product liability insurance

If you own a business in a sector like retail or technology, you may benefit from product liability cover. An extension of public liability insurance, it covers the cost of claims made against you for injury or illness caused by the products you’ve designed, manufactured or sold.

Key person insurance

If someone key to the operation of your company dies or becomes so ill they’re unable to work, key person insurance provides the finance needed for your business to continue and gives you time to make considered plans for the future.

Commercial property insurance

If you have business premises, it’s a good idea to make sure you’re covered for things like accidental damage, vandalism and theft. 

Commercial property insurance can include the following:

  • Buildings insurance — In the event of things like fire or flooding, this covers the cost to repair or rebuild your premises. When deciding how much cover you need, consider the standard of rebuild you require and how much the costs would be.
  • Contents insurance — This covers the cost of any stock, tools, machinery and equipment that’s stolen, damaged or lost. Think about how much it would cost to replace your contents and use that to work out how much cover you need.
  • Fixtures and fittings insurance — Any items that aren’t stock and don’t belong to the building can be insured against accidental damage, vandalism and theft too.
  • Loss of rent insurance — If you rent out a commercial property to tenants, this will cover your rent between tenancies.

Tool and equipment cover

Any business owner can include tool and equipment cover on their commercial insurance policy, but it’s particularly beneficial for tradespeople who visit numerous sites. This is because there’s more risk of damage, loss and theft.

As well as covering your own tools, this type of insurance can include hired equipment.

Additional types of commercial insurance

Depending on what type of business you own, you might also benefit from some of the following specialist policies:

  • Cyber and data insurance
  • Directors and officers liability insurance
  • Employee benefits like critical illness cover and death in service cover
  • Equipment breakdown insurance
  • Life insurance
  • Medical malpractice cover
  • Office insurance
  • Personal accident cover
  • Portable equipment cover

Am I legally required to have commercial insurance?

Although we’ve already mentioned the types of commercial insurance that are required by law, it’s worth reiterating these. The last thing you want is to be left facing fines or charges because you didn’t have the right business insurance in place.

If you employ one or more people and don’t have employers’ liability insurance, you could face fines of up to £2,500 for every day you aren’t properly insured.

Similarly, if you drive a vehicle for work purposes, the law requires you to have commercial vehicle insurance.

Some other types of commercial insurance may not be a legal requirement, but some industry regulators make it mandatory in order for your business to operate. Solicitors and healthcare workers, for example, will need professional indemnity insurance.

If you’re unsure about the type of commercial insurance you’re legally required to have, speak to your broker or insurance company, who will be able to advise you.

Summary

Commercial insurance is important to have because it protects your equipment, stock and building against things like theft and damage, as well as loss of money in the event that your business is unable to operate. It’s also there to protect you, your employees and the general public for things like injury and legal fees.

The best way to get commercial insurance is to go through a broker like A-Plan, although you can use a price comparison website or do your own research online. The benefit of a broker is that they will discuss your requirements with you and find you the best deal by contacting a range of providers on your behalf.

Every business is unique, which is why there are many different types of commercial insurance cover. Some will be relevant to your business and others won’t, so you have the option to pick and choose what to include based on the types of risk your business faces.

Some of the most common types of commercial insurance are employers’ liability insurance, public liability insurance, commercial vehicle insurance and professional indemnity insurance.

Depending on the type of business you operate, you may also benefit from the following types of commercial insurance:

  • Product liability insurance
  • Key person insurance
  • Commercial property insurance
  • Tool and equipment cover
  • Cyber and data insurance
  • Directors’ and officers’ liability insurance
  • Employee benefits like critical illness cover and death in service cover
  • Equipment breakdown insurance
  • Life insurance
  • Medical malpractice cover
  • Office insurance
  • Personal accident cover
  • Portable equipment cover

The two types of cover you’re legally required to have are employers’ liability insurance if you employ people and commercial vehicle insurance if you drive a vehicle for work purposes. Additionally, some industry regulators require you to have cover like professional indemnity insurance.