Business insurance types quick reference

Use this table to identify which insurance types apply to your business. Mandatory insurance is a legal requirement; operating without it is a criminal offence.

Insurance type	Legal status	What it covers	Who needs it	Typical cover level
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Business Insurance Types Comparison

Overview comparing different business insurance types and their requirements

UK businesses need different types of insurance depending on their activities. Some are legally required, others are contractually required, and some are optional but prudent. Understanding the differences helps ensure adequate protection.

Employers' Liability: LEGALLY REQUIRED if you employ anyone. Minimum £5m cover. Protects against employee injury/illness claims.
Motor Insurance: LEGALLY REQUIRED for any vehicle used for business. Criminal offence to drive uninsured.
Professional Indemnity: LEGALLY REQUIRED for regulated professions (solicitors, financial advisers, architects). Covers negligent advice claims.
Public Liability: NOT legally required but often contractually required by clients. Covers third-party injury/damage claims.
Products Liability: NOT legally required but essential for manufacturers and retailers. Covers claims from defective products.
Business Contents: NOT required but recommended. Covers theft, fire, damage to business assets.
Business Interruption: NOT required but recommended. Covers lost income when you cannot trade.
Cyber Insurance: Increasingly important. Covers data breaches, ransomware, GDPR fines.
Key Person: Optional. Compensates business if critical person dies or is incapacitated.

Choosing the right cover:

Do you employ anyone? Employers' Liability is legally required
Do you use vehicles for work? Business motor insurance is legally required
Are you a regulated professional? Professional Indemnity is legally required
Do you interact with customers or visit premises? Public Liability is practically essential
Do you sell physical products? Products Liability is strongly recommended

Legally required business insurance

Mandatory insurance requirements for UK businesses with penalties for non-compliance.

UK law requires certain types of insurance depending on your business activities. Failing to have the correct insurance can result in fines, prosecution, and inability to claim compensation.

Employers' Liability Insurance - Requirement: Mandatory if you employ anyone (including part-time, casual, and family members working for you)
Employers' Liability Insurance - Minimum cover: £5 million (though most policies provide £10 million)
Employers' Liability Insurance - Penalty for no insurance: £2,500 fine for every day without cover
Employers' Liability Insurance - Display requirement: Must display certificate or make available to employees, or face £1,000 fine
Employers' Liability Insurance - Certificate retention: Retaining certificates for 40 years is recommended best practice (but no longer legally required since October 2008) as claims for occupational diseases can be made decades after exposure
Motor Insurance - Requirement: Mandatory for any vehicle used for business purposes (company car, deliveries, client visits)
Motor Insurance - Minimum cover: Third party liability (personal car insurance may not cover business use)
Motor Insurance - Penalty: Criminal offence with unlimited fine, 6-8 penalty points, possible disqualification, and vehicle seizure
Professional Indemnity - Requirement: Mandatory for some regulated professions (solicitors, financial advisers, architects, accountants, healthcare)
Professional Indemnity - Minimum cover: Varies by regulator (e.g., £2-3m for solicitors per SRA requirements, €1.25m per claim for FCA-regulated financial advisers converted to sterling, £250k for architects)
Professional Indemnity - Penalty: Regulatory action, removal from professional register, FCA enforcement (financial services)

Exemptions and special cases

Employers' Liability exemptions:

Family businesses where all employees are close relatives
Employees working outside Great Britain for more than 14 consecutive days
Some companies with one employee who owns 50% or more of the share capital

Important: Even if exempt, you may still want cover as you could be liable for employee injuries.

Employers' liability insurance

Sources:

Employers' Liability (Compulsory Insurance) Act 1969
Health and Safety Executive (HSE) guidance
Road Traffic Act 1988
Financial Conduct Authority (FCA) requirements
Professional regulatory bodies (SRA, ARB, etc.)

Employers' Liability Insurance Requirements

Legally required insurance for businesses that employ staff

Legal requirement: LEGALLY REQUIRED if you employ anyone (even part-time or family members working for you)
Minimum cover: £5 million minimum (most policies provide £10 million)
Penalty for non-compliance: £2,500 fine per day without insurance, plus £1,000 fine for not displaying certificate
What it covers: Compensation claims from employees injured or made ill at work
Exemption: Close family businesses may be exempt

Employers' Liability Insurance

Public Liability Insurance

Insurance protecting against third-party injury or property damage claims

What it covers: Third-party injury or property damage claims (customers, visitors, general public)
Typical cover: £1 million to £10 million (many clients require minimum £5 million)
When required: Often contractually required by clients, venues, or landlords before allowing you to trade
Who needs it: Almost all businesses that interact with customers or work on third-party premises
Legal status: Not legally required but often practically essential

Optional Business Insurance Types

Valuable insurance types to consider based on business needs

Directors & Officers (D&O): Protects company directors from personal liability for management decisions
Cyber Insurance: Covers data breaches, cyber attacks, ransomware, GDPR fines, business disruption
Business Interruption: Covers lost income and ongoing costs if you cannot trade due to fire, flood, or other event
Contents and Equipment: Protects business assets (computers, machinery, stock) from theft, fire, or damage
Buildings Insurance: Required if you own business premises; often required by commercial mortgage lenders
Key Person Insurance: Compensates business if critical person (founder, director) dies or is seriously ill

For guidance on choosing and purchasing cover, see Get business insurance.

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