Business insurance

What is business insurance? How does it work? What type do I need? A-Plan has the answers.

A-Plan Business Insurance

Working for yourself is a dream. You get to have your own company, employees, and so many opportunities to grow, learn, and develop. Who doesn’t aspire for the independence that comes with owning a business?

But, with great freedom comes great responsibility. When you’re self-employed, you’ve got to step up. You need to cover your company, your employees, and most importantly, your clients. Any self-employed person needs to get some level of insurance cover.

That is what business insurance is for; with a policy for every company type, size, and need, you can find a cover that’s best for your business. But what covers are out there? And which ones should you get?

In this guide to business insurance, we’ve put together all the information you need. From what gets covered to quotes and premiums, we’re here to help. This article opens up the world of business insurance to you, so it’s easier to pick your cover.

What is business insurance?

Business insurance is coverage you can get for your company. It covers your company in many scenarios, from financial losses to legal fees and compensations.

Business insurance typically comes with different policies for your specific company needs. So, it depends on the types of risks your business implies.

You can choose the right policy for your company with the help of expert advisors, like brokers. Or, you can do it yourself, if you prefer. There are comparison websites you can use, but they’re not the most reliable.

How does business insurance work?

Business insurance works by covering whatever you think poses risks in your company. As long as you pick the right policies for your industry and specialism, you can rest assured you’re protected.

So, if your employees or anyone else suffers injury or sickness caused by your business, any expenses are covered. This cover often includes legal fees, for example. Or, if your businesses’ everyday work is interrupted, you can claim and have the losses covered as well.

The same goes for any damages your business suffers, including theft. All in all, business insurance is a great thing to have. You never know when you need to cash in a policy.

What types of business insurance can you get?

There are numerous business insurance covers, which makes it slightly challenging to get the right policies for your company.

But, to keep it simple for now, there are three levels of cover you can get. These are the three main types of business insurance:

  • Public liability
  • Employer’s liability
  • Professional indemnity insurance (PI insurance)

Public liability insurance

Public liability insurance, or public indemnity insurance, is a type of policy that covers any damage your company does to a member of the public. It includes their property.

If someone claims your business has affected them somehow, your public liability insurance will cover legal costs and any other fees. It is an excellent policy to have in place, seeing you never know when something could happen.

Employer’s liability insurance

Employer’s liability insurance covers employers when their employees fall ill or become injured because of their work. So, the insurance covers all expenses if something goes wrong with one of your employees.

Professional indemnity insurance (PI insurance)

PI insurance covers the legal costs of someone taking you to court because of unsatisfactory work. The cover can include false advice or defective work.

What other business insurance policies can you get?

Apart from your main business insurance options, you can get other policy covers for your company. These include:

  • Business assets insurance
  • Business interruption insurance
  • Business premises insurance
  • Credit risk insurance
  • Cyber-risk insurance
  • Key person insurance
  • Product liability insurance
  • Business vehicle insurance

Business assets insurance

A business assets insurance policy will have your equipment, tools, and furniture insured. Overall, most objects on your businesses’ premises get covered by the assets insurance. In some cases, this includes cash in the workplace.

Business interruption insurance

If something unexpected happens and your business has to stop functioning, the business interruption insurance covers your loss of income. So, if you get this policy, you don’t need to worry about financial loss.

The business interruption insurance policy covers losses caused by natural causes or break-ins. Things like floods and fires are part of this policy’s cover.

Business premises insurance

The business premises insurance policy is a cover for repairs to your company’s premises. It is also known as commercial property insurance.

The commercial insurance includes rebuilding any affected parts of your building. If your premises are damaged through vandalism, or by fires or floods, for example, your insurance policy will cover any expenses for fixing it.

Credit risk insurance

Sometimes customers inexplicably refuse collaboration when it comes to paying off any fees they owe you. Credit risk insurance is for scenarios like this. Your insurance covers you for losses suffered because of a customer’s lack of cooperation in paying off debt or service fees.

Cyber-risk insurance

Most businesses store their data online, so the cyber-risk insurance policy is in place to ensure you get covered in a data breach. It also applies if a scammer tricks you through e-mail or other media.

Key person insurance

The key person insurance, also known as the key man insurance, covers you if your company loses income when your most valuable employee cannot work anymore. Key person insurance applies in case of their death or if they fall critically ill.

Product liability insurance

A product liability insurance policy will have your company covered in the case of a faulty product that causes damage. This policy applies whether the damage is an injury to a member of the public or their property. Product liability insurance is something you need if your business designs, sells, or supplies products.

Business vehicle insurance

The business vehicle insurance policy can cover your business vehicle, its driver, members of the public, and their vehicles. It also covers any legal fees in a trial if your employee causes an accident.

There are different policies you can get with this cover. You might even want to opt for business fleet insurance if you have multiple company vehicles.

Why should you insure your business?

It would be best if you bought business insurance to protect yourself and your business. Accidents happen, things go wrong, and equipment fails. If you get business insurance, you can have some peace of mind.

Otherwise, you might have to pay thousands and potentially close your business in the case of an incident because of the financial loss. From business liability insurance to PI insurance, you’re better off on the safe side.

Is business insurance a legal requirement?

Some business insurance policies are a legal requirement, like in the case of employer’s liability insurance.

To make things easier, refer to the information below:

Is public liability insurance compulsory?

Public liability insurance isn’t a requirement by law. Yet, you might find that depending on your profession, you need to get a public liability insurance policy.

Some clients will also require you to get public liability cover before you work with them. The same goes for trade associations that require this policy by default. This policy is a requirement for workers like builders, personal trainers, and many more.

Is employer’s liability insurance compulsory?

Yes, employer’s liability insurance is compulsory in the United Kingdom. It is a legal requirement as long as you have employees, even if their work is unpaid (in situations like volunteering, for example).

You need employer’s liability insurance when you have as little as one single employee. If you don’t get this policy, you risk a fine of £2,500 for each day that goes without insurance.

Is professional indemnity insurance compulsory?

Professional indemnity insurance is not compulsory, but this doesn’t mean you don’t have to get it. Depending on your type of business, you might have to have professional indemnity insurance. However, it’s not a legal requirement.

So, architects and solicitors do have to get professional indemnity insurance, for example. They get regulated by other bodies which require this policy.

How much does business insurance cost?

Typically, business insurance costs range between £50 and £1,000 per year in the UK. The average price for public liability insurance sits somewhere around £118 per year in the UK.

The cost of your business insurance will depend on some factors. These include the level of cover and amount of policies you want to get.

Other things are also important when it comes to your business insurance:

  • Your industry
  • Your location
  • The size of your business
  • Any previous claims you’ve made
  • How much cover is needed
  • How old your business is

How to get a lower quote on your business insurance policy?

Business insurance quotes can seem like a lot of money when you first try to insure your company. You should know there are ways to get a lower quote on your insurance policy:

  • Use an insurance broker. They can negotiate a better price for you. It is in your broker’s interest to get you the best business insurance cover. A broker can get you a tailored business insurance quote for a better price.
  • Compare many policy quotes. If you’re not using an insurance broker, you’ll want to look at as many policies as you can. This way, you can consider many different policies before making a decision.
  • Make your policy purchase online. In some cases, if you independently choose your policy, you can get it cheaper online through exclusive discounts. Yet, you might have to talk to an insurance provider on the phone if you have a bigger business. It’s often harder to find a better deal this way than when you go through an insurance broker.
  • Be specific about your businesses’ value. It would help if you went over your premises and valuables. Take an inventory. If you accidentally give a higher value, you might overpay for your policy.
  • Go for a higher voluntary excess. If you deliberately choose a high voluntary excess, it’ll be seen positively by your insurance provider. The voluntary excess is the sum you pay when making a claim, so don’t go over your budget.

Business insurance FAQ

We’ve created a section to answer frequently asked questions on business insurance.

Do I need business insurance if I’m self-employed?

You don’t legally need business insurance if you’re self-employed. So you’re not obliged to get it unless you have members of the public come onto your premises.

You might want to opt for public liability insurance. It deals with risks, and in the case of any issues with your customers, you’ll know you’re safe.

Also, general liability, cyber liability, and professional liabilities are safe choices if you’re a sole trader. Why shouldn’t you take advantage of the protection that’s available to you?

Will changing from sole trader to limited company affect my business insurance policy?

Typically, it won’t affect your business insurance policy if you’re changing from sole trader to limited company. This change will only affect your insurance if you hire employees, in which case you should get an employer’s liability policy.

But, if your business stays the same, keeps its name, and provides the same services, you don’t need to worry about changing to a limited company.

What information do I need to share to get business insurance?

You do need to share a few things to get your business insurance cover. You share these details so you can get the best premium for your circumstances, needs, and budget.

So, to get business insurance, you need to share:

  • Your business’ occupation and where it’s based.
  • The level of cover you require and the general policies you’d like.
  • Your number of employees and any contractors.
  • Any claims or legal disputes you’ve dealt with in the past.
  • Specific pieces of information about your business, which your provider will name.

Can I buy business insurance if I’ve had any CCJs or IVAs?

Whether you can still buy business insurance with CCJs or IVAs depends on your insurance company. Yet, it doesn’t mean you won’t be able to get one.

Usually, you can still get insurance if you’ve had a CCJ or IVA. Your rates may be higher than those that don’t have them, but you can still insure your business.

Why should I choose an insurance broker to get my business insurance?

An insurance broker is essentially getting your insurance for you. They are there for you, from getting the best business insurance quotes to walking you through the whole process, and A-Plan do not charge clients for this service.

There are many benefits to choosing an insurance broker. They can offer their professional expertise, liaise with insurance companies on your behalf, and help you choose the best for yourself. Our brokers will get to know your needs, which means you can get the best policies for your company.

All in all, business insurance is a broad field that makes many policies available to you. What matters most is that you get the right ones for your company.

Now that you’ve learned the ins and outs of business insurance, and the best way to go about it, get in touch with our friendly team who can help you choose the right policy for you and your business. Our business teams are available in branch or via a telephone, and you can find your closest branch here.