Journey

Insuring your new business

A step-by-step learning journey for new business owners: understand which insurance is legally required, what additional cover you need, how to compare and buy policies, and how to manage renewals.

Starting a Business Updated 15 September 2026

5 milestones references 9 guides

Insuring your new business

Getting the right insurance protects your business, your employees, and you personally. Some insurance is legally required from day one. This journey takes you through what you need, how to buy it, and how to keep it up to date.

Understand what insurance is legally required
Three types of business insurance are legally mandated in specific circumstances. Start here to check which apply to you.
Legally required insurance types

Check each of these against your business activities. Most new businesses with employees need at least employers' liability insurance.
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

Required for some regulated professions under their profession-specific rules, including many solicitors, financial advisers and 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? Check your regulator's profession-specific Professional Indemnity rules

Do you interact with customers or visit premises? Public Liability is practically essential

Do you sell physical products? Products Liability is strongly recommended
Employers' liability insurance

Detailed guide to employers' liability requirements, exemptions, penalties, and how to get covered.

Professional indemnity insurance

Who needs PI insurance, minimum cover levels for regulated professions, and how claims-made policies work.
Assess what additional cover you need

Beyond legal requirements, several types of insurance are practically essential for most businesses. Your specific needs depend on your activities, premises, and clients.

Choosing the right business insurance

Work through a structured assessment of your insurance needs based on your business type, activities, and risk profile.

Cyber insurance

If your business holds personal data, takes online payments, or depends on IT systems, cyber insurance is increasingly important. Many insurers now require Cyber Essentials certification.

First-party cover

Data breach incident response, forensic investigation, ICO and individual notification costs, business interruption from cyber attack, ransomware negotiation and payment (where legal), system restoration costs, reputational crisis management and PR

Third-party cover

Defence costs for data protection claims, regulatory fines and penalties (where insurable), compensation to affected customers, PCI DSS fines for payment card breaches

Typical cover (micro-business)

£100,000

Typical cover (small business)

£250,000 to £1 million

Typical cover (medium business)

£1 million to £5 million

Annual premium (small business, basic cover)

£300 to £1,000

Annual premium (medium business)

£1,000 to £5,000

Cost factors

Turnover, data volume held, sector (healthcare and financial services attract higher premiums), security posture, claims history

Underwriting requirements

Many insurers require Cyber Essentials certification (reduces premium 10-25%), MFA on email and remote access, regular patching, documented backup procedures

When cover is essential

Any business holding personal data under UK GDPR, e-commerce businesses, businesses dependent on IT systems, those handling payment card data

Common exclusions

Pre-existing vulnerabilities known before policy inception, deliberate acts by the insured, war and terrorism (increasingly contested), reputational damage not flowing from a covered incident

Cyber insurance for businesses

What cyber insurance covers, typical costs, underwriting requirements, and when it is essential.

Business interruption insurance

How business interruption cover works, indemnity periods, sum insured calculation, and lessons from the COVID-19 test case.
Compare and buy your insurance

Once you know what cover you need, compare your buying options. A broker can save time and often find better terms, but direct purchase works for straightforward policies.

Buying routes compared

There are several ways to buy business insurance. The right route depends on the complexity of your needs.

Direct from insurer

Simple online quotes with quick setup. Good for straightforward cover such as employers' liability or public liability for low-risk businesses. Limitation -- only offers that insurer's own products with no market comparison, and limited advice on cover levels.

Insurance broker (recommended for most businesses)

Searches multiple insurers, provides advice on cover levels and policy terms, helps with claims, and understands sector-specific risks. Must be FCA-authorised or an Appointed Representative.

Comparison websites

Useful for price comparison on simple policies. Limitation -- usually limited panel of insurers, may not cover specialist commercial risks, and less support at claims stage.

Trade association schemes

Group-negotiated rates through your trade body (e.g. Federation of Small Businesses or trade-specific bodies). Often cheaper than individual policies and tailored to sector risks.

Wholesale and specialist brokers

For unusual or high-risk businesses such as marine, aviation, events, or entertainment. Access Lloyd's market and specialist facilities not available through standard brokers.

FCA register check

Always verify your broker or insurer is on the FCA Financial Services Register before purchasing cover.

Commission disclosure

Brokers earn commission from insurers. Commercial customers can request disclosure of commission amounts under FCA rules.

When to use a broker

Complex risks, multiple policy types needed, claims history, specialist sector, or high-value cover. A broker can ensure adequate cover and negotiate better terms.

Find an insurance broker (BIBA) (opens in a new tab)

Comparing insurance policies

How to read policy documents, compare cover levels, understand exclusions, and avoid common traps.

Insurance types quick reference

At-a-glance comparison of all business insurance types with typical cover levels and costs.
Understand your disclosure duties

The Insurance Act 2015 requires you to make a fair presentation of risk when buying or renewing insurance. Failure to disclose material facts can reduce or void your cover.

Key policy terms

Before you sign, make sure you understand these essential terms. They affect what you are covered for and how claims work.

Excess (deductible)

The amount you pay towards each claim before the insurer pays. Compulsory excess is set by the insurer; voluntary excess is an additional amount you choose. A higher voluntary excess reduces your premium but increases your out-of-pocket cost per claim.

Indemnity limit

The maximum the insurer will pay. Can be "per claim" (each individual claim up to the limit) or "aggregate" (total for all claims in the policy year). Aggregate limits are cheaper but riskier if you have multiple claims in the same year.

Claims-made basis

Policy covers claims made during the policy period, regardless of when the work was done. Used for professional indemnity, directors' and officers', and cyber insurance. You must maintain continuous cover with no gaps to avoid losing protection for past work.

Occurrence basis

Policy covers incidents that occur during the policy period, regardless of when the claim is made. Used for employers' liability, public liability, and property insurance. More expensive but provides broader long-term protection.

Retroactive date

The date from which past work is covered under a claims-made policy. If you switch insurer, ensure the new policy's retroactive date matches the previous one, otherwise work done before the new date will not be covered.

Subrogation

The insurer's right to recover their costs from a responsible third party after paying your claim. You must cooperate with recovery action and must not settle with the third party without your insurer's consent.

Material fact

Information that would influence a prudent insurer's decision to provide cover or set terms. Under the Insurance Act 2015 duty of fair presentation, you must disclose all material facts when taking out or renewing a policy. Failure to disclose can reduce or void your cover.

Schedule

The personalised section of your policy document showing your business details, cover levels, excess amounts, and any endorsements. Always check the schedule matches what you agreed with your broker or insurer.

Endorsement

An amendment to the standard policy terms. Extensions add cover beyond the standard wording; exclusions remove cover for specific risks. Endorsements override the main policy wording where they apply.

Condition precedent

A policy condition you must comply with for a claim to be valid. Common examples include maintaining working fire and intruder alarms, following specified security procedures, and notifying your insurer within the timeframe stated in the policy.

Insurance Act 2015 compliance

Your duties under the Insurance Act 2015: fair presentation, warranties, fraudulent claims, and late payment remedies.
Set up your renewal calendar
Insurance is not a one-off task. Set calendar reminders to review and renew your policies well before expiry. Even one day without employers' liability cover is a criminal offence.
Renewal checklist

Use this checklist at every renewal. Start the process 8 to 12 weeks before your policy expires.
When to start renewal process

8 to 12 weeks before policy expiry

Disclosure deadline

You must disclose all material changes before renewal (Insurance Act 2015, s.3 duty of fair presentation)

EL certificate display

Employers' liability certificate must remain displayed or accessible to employees at all times

Record retention (EL certificates)

Keep expired employers' liability certificates for at least 40 years (recommended best practice, as occupational disease claims can be made decades after exposure)

Gap in cover penalty

Even one day without employers' liability insurance is a criminal offence carrying a fine of up to £2,500 per day without cover

Insurance renewal checklist

Review current cover levels — are they still adequate for your turnover, number of employees, and business activities?

Update business details — new premises, additional staff, changed activities, new equipment.

Disclose material changes — incidents, claims, near-misses, regulatory actions, and criminal convictions. The Insurance Act 2015 (s.3) requires a fair presentation of risk at renewal.

Check exclusions — do current exclusions still make sense? Have your activities changed since the policy was placed?

Review excess levels — could you afford a higher excess in exchange for a lower premium?

Get at least 3 comparison quotes — from your current insurer, a broker, and at least one other source.

Do not just compare price — check cover levels, exclusions, excess amounts, and claims service reputation.

Verify insurer is FCA-authorised — check the Financial Services Register before committing.

Set calendar reminders — 12 weeks, 8 weeks, and 4 weeks before your next expiry date.

Keep a copy of your renewal disclosure — document what you told the insurer and when, in case of a future dispute.
Insurance renewal guide

Step-by-step renewal process, disclosure obligations, and how to challenge premium increases.

Take note

Keep records: Store all policy documents, certificates, and renewal correspondence. Keep expired employers' liability certificates for at least 40 years, as occupational disease claims can be made decades after exposure.

Insuring your new business

Insuring your new business

Understand what insurance is legally required

Assess what additional cover you need

Compare and buy your insurance

Understand your disclosure duties

Set up your renewal calendar

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