What Is Small Business Insurance?

Small Business Insurance is a general term for commercial insurance designed to protect smaller businesses against a range of financial risks.

It isn’t one standard policy. The cover required depends on the type of business you operate, the property and equipment you own, the services or products you provide and whether you employ staff.

Some businesses may be suited to a packaged commercial policy, while others require a combination of specialist insurance covers.

Our role is to understand your business and help you consider the protection relevant to your circumstances, without assuming that every business needs the same insurance.

What Does Small Business Insurance Cover?

Depending on your business and the insurer, a small business insurance arrangement may include several types of protection.

Not all covers are automatically included. Availability, limits, excesses, exclusions and conditions depend on the policy selected.

Small Business Insurance for Different Industries

Different industries face different risks. We help businesses explore insurance suited to their particular operations.

These are examples of the types of businesses and covers we can help with. The appropriate insurance depends on your individual circumstances.

Small Business Insurance for Sole Traders

Sole traders can face many of the same commercial risks as larger businesses, even without employees or dedicated premises.

Depending on your work, you may need to consider:

• Public Liability Insurance when working at customer premises or interacting with the public.
• Professional Indemnity Insurance if you provide advice or professional services.
• Tools and equipment cover if your business relies on valuable equipment.
• Commercial vehicle insurance for relevant business vehicle use.
• Cyber Insurance if you hold customer data or rely heavily on digital systems.

The fact that a business is small does not necessarily mean that its potential liability exposure is small.

Insurance for Start-Ups and New Businesses

Starting a new business often involves balancing insurance requirements against limited budgets.

It’s important to identify the risks that could have a serious financial impact, along with any legal or contractual insurance requirements.

New businesses may need to consider:

• Insurance required before trading begins.
• Contracts requiring specified liability limits.
• Protection for newly purchased equipment and stock.
• Insurance for business premises.
• Cover for employees as the business grows.
• Changes in activities or turnover that may affect insurance arrangements.

Edison Ives can help you consider suitable cover based on the activities you intend to undertake.

Is Small Business Insurance Compulsory in the UK?

There is no single insurance policy that every small business in the UK must purchase.

However, certain insurance requirements apply depending on the business.

Employers’ Liability Insurance

Most businesses employing staff are legally required to hold Employers’ Liability Insurance, subject to exemptions. The minimum required cover is generally £5 million.

Motor Insurance

Vehicles used on public roads generally require appropriate motor insurance. Business use must be accurately reflected in the policy.

Professional and Contractual Requirements

Certain regulated professions may be required to maintain Professional Indemnity Insurance or other specific cover.

Clients, landlords, lenders and commercial contracts may also require businesses to hold particular insurance policies or liability limits.

Public Liability Insurance is not universally compulsory for UK small businesses, although it is commonly requested under commercial contracts.

Public Liability Insurance for Small Businesses

Public Liability Insurance is one of the most commonly considered forms of cover for small businesses.

It may respond to certain claims involving injury to third parties or damage to their property arising from insured business activities.

For example:

• A customer slips and suffers an injury at your premises.
• Your business accidentally damages a customer’s property.
• A visitor alleges injury arising from your business operations.

Cover depends on the circumstances, legal liability and policy wording.

Find out more about Public Liability Insurance.

Business Contents and Equipment Insurance

Even a small business may rely on expensive equipment, stock and other physical assets.

Depending on your business, these may include:

• Computers and office equipment.
• Tools and machinery.
• Retail stock and goods.
• Furniture, fixtures and fittings.
• Specialist business equipment.
• Materials used in manufacturing or contracting.

Appropriate insurance can help protect against specified events such as theft, fire and accidental damage, where covered.

It’s important to ensure declared values reflect the appropriate replacement or reinstatement basis and to understand any security requirements.

Business Interruption Insurance for Small Companies

Property damage can cause more than the immediate cost of repairs or replacement.

If a fire, flood or other insured incident prevents your business from operating normally, you may also lose income while continuing to incur expenses.

Business Interruption Insurance can provide protection against specified financial losses following an insured event.

Important considerations include:

• The policy’s insured interruption triggers.
• The appropriate level of gross profit or revenue cover.
• The maximum indemnity period.
• Continuing business expenses.
• How long repairs, replacement or relocation could take.

For more information, explore our Business Interruption Insurance page.

Cyber Insurance for Small Businesses

Cyber incidents are not limited to large organisations.

Small businesses may rely on email, online payments, customer records, cloud software and other digital systems to operate.

Depending on the policy, Cyber Insurance may provide cover for certain costs and losses associated with:

• Ransomware and malicious cyber incidents.
• Data breaches and incident response.
• Business interruption caused by covered cyber events.
• Specialist technical and legal assistance.
• Specified third-party cyber liability claims.

Cover varies considerably between insurers and may be subject to security requirements.

Learn more about Cyber Liability Insurance.

How Much Does Small Business Insurance Cost?

The cost of Small Business Insurance varies depending on the business, its activities and the protection required.

Rather than assuming the cheapest policy is the best option, it’s important to consider whether the cover meets your business’s needs and contractual obligations.

How to Choose the Right Small Business Insurance

When comparing business insurance policies, price is only one consideration.

We recommend reviewing:

• Business activities: Does the policy accurately describe everything you do?
• Cover limits: Are the limits appropriate for your potential exposures and contractual requirements?
• Exclusions: Are any important activities or risks excluded?
• Policy excesses: How much would your business need to contribute to a claim?
• Property values: Are buildings, stock and equipment insured on the correct basis?
• Business interruption: Would the selected indemnity period be sufficient?
• Employees and subcontractors: Are workforce arrangements correctly disclosed?
• Changes in circumstances: How should you notify insurers when the business grows or changes?

Our team can help you understand the terms offered and identify areas that deserve particular attention.

Insurance for Growing Small Businesses

Your insurance requirements may change as your business develops.

For example, you may:

• Take on your first employees.
• Move into larger premises.
• Purchase additional machinery or equipment.
• Increase stock levels.
• Introduce new products or services.
• Begin importing or exporting goods.
• Take on larger contracts.
• Expand into new trading territories.

These changes may affect your insurance cover, limits or underwriting terms.

It’s important to keep your broker informed of material changes and review your insurance arrangements as your business grows.

Small Business Insurance for Difficult-to-Place Risks

Some small businesses find it difficult to obtain insurance because of their activities, previous claims or unusual circumstances.

Examples may include:

• Higher-risk trades and occupations.
• Businesses with previous insurance claims.
• New or emerging industries.
• Businesses operating from unusual premises.
• Companies with specialist liability exposures.
• Businesses previously refused insurance.

We can help investigate appropriate insurance markets for these risks, subject to insurer acceptance.

Visit our Refused or Declined Insurance page for further information.

Frequently Asked Questions About Small Business Insurance

What insurance does a small business need?

It depends on the business. Common covers include Public Liability, Employers’ Liability, property, business interruption, Professional Indemnity and Cyber Insurance. Some covers may be legally or contractually required.

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

Self-employed individuals may need insurance depending on their activities, assets and contractual requirements. Public Liability and Professional Indemnity Insurance are common considerations.

Is business insurance compulsory for a limited company?

There is no universal requirement for every limited company to hold a general business insurance policy. However, Employers’ Liability, motor insurance and certain profession-specific requirements may apply.

Can I combine different types of business insurance?

Yes. Commercial package and Commercial Combined policies may bring several covers together, subject to the insurer and business activities.

Does Small Business Insurance cover theft?

Property or contents insurance may cover specified theft losses, subject to the policy wording and security conditions. Liability insurance alone does not generally cover theft of your own property.

Does business insurance cover loss of income?

Business Interruption Insurance may cover certain financial losses following an insured event. It is not automatically included in every small business policy.

Can I get insurance for a new business?

Insurance may be available for start-ups and newly established businesses, depending on their activities and underwriting information.

Can Edison Ives help if I’ve previously been declined insurance?

We can help explore specialist markets for businesses that have experienced insurance difficulties. Cover is subject to insurer acceptance.

Why Choose Edison Ives for Small Business Insurance?

We understand that small businesses need practical insurance advice and protection that reflects their individual circumstances.

At Edison Ives, we take time to understand your business rather than assuming that a standard package will always be appropriate.

• Personal support from commercial insurance brokers.
• Insurance options for a wide range of small businesses.
• Consideration of liability, property and specialist risks.
• Help understanding policy terms, limits and exclusions.
• Support for growing and changing businesses.
• Experience considering unusual and difficult-to-place risks.

Part of David Roberts & Partners

Edison Ives is proud to be part of David Roberts & Partners Ltd, an independent insurance broker group.

Our group relationship supports access to wider insurance expertise and markets while allowing us to maintain a personal approach to our clients.

Contact Edison Ives

Call 0113 390 4646

Email info@edinsure.co.uk