# Business Insurance: What does it cover?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-06-14
Category: INSURANCE
Category URL: https://financedigest.com/category/insurance
Meta Title: The Importance of Business Insurance in the UK
Meta Description: Learn about the various types of business insurance in the UK, including liability insurance and material damage insurance, to protect your business assets and
URL: https://financedigest.com/business-insurance-what-does-it-coverhtml

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_By_ **_Kerry Fawcett,_** _Digital Director at iCompario._

[Business insurance](https://www.icompario.com/en-gb/insurance/) protects business owners and their assets against the everyday risks that can occur when running a business. In the UK, business insurance is important for self-employed people, sole traders, and limited liability companies. It covers everyday risks including professional mistakes, theft, damage, accidents, and [legal fees](https://www.financedigest.com/how-to-budget-for-legal-fees-in-your-business.html "How to Budget for Legal Fees in Your Business").

[**Types of Insurance**](https://www.financedigest.com/types-of-insurance-for-yourself-and-your-family.html "Types Of Insurance For Yourself And Your Family")

There are a various types of [business insurances](https://www.financedigest.com/how-technology-can-support-insurance-business-growth.html "How technology can support insurance business growth") and normally are offered in as part of package or as separate policies. Here is a brief overview of the main [types of business](https://www.financedigest.com/types-of-business-partnership.html "Types of business partnership") insurance cover:

[**Liability Insurance**](https://www.financedigest.com/are-you-getting-what-you-are-paying-for-when-it-comes-to-cyber-liability-insurance.html "ARE YOU GETTING WHAT YOU ARE PAYING FOR WHEN IT COMES TO CYBER LIABILITY INSURANCE?")

This [insurance can rectify mistakes that are made or any damages that need to be paid due to the negligence of the business](https://www.financedigest.com/are-there-tax-breaks-for-business-health-insurance.html "Are there tax breaks for business health insurance?"). Potentially this may include property damage, injury or even death. There are four main [types of liability insurance:](https://www.financedigest.com/types-of-insurance-coverage.html "Types of insurance coverage")

1. _Employers’ liability insurance_ – A legal requirement for a UK business with employees and it will pay for the legal and compensation costs due to a result of someone getting ill, injured or [killed as a result of working for the business](https://www.financedigest.com/pitiless-machines-will-kill-your-business-if-you-dont-respond-now-warns-servion.html "‘Pitiless machines’ will kill your business if you don’t respond now, warns Servion").
2. _Public liability insurance_ – An insurance [designed to protect a business](https://www.financedigest.com/3-ways-to-go-about-testing-your-business-ux-design.html "3 Ways to Go About Testing Your Business’ UX Design") from third party claims. [Public liability insurance](https://www.icompario.com/en-gb/insurance/what-is-public-liability-insurance/) will cover compensation costs if someone gets ill injured or dies due to work a business has done or is doing, or if damage occurs to their property. Recommended for business activities that involve interacting with the public, for example plumbers, electricians, building contractors and cafes/restaurants.
3. _Product liability_ [insurance – As suggested by the name, this insurance covers](https://www.financedigest.com/japan-insurers-to-maintain-cover-for-lng-vessels-in-russian-waters.html "Japan insurers to maintain cover for LNG vessels in Russian waters") faulty products. [Business will need](https://www.financedigest.com/4-kinds-of-software-your-new-business-needs.html "4 Kinds of Software Your New Business Needs") this in case a product they manufacture or supply causes injury, illness, death, or property damage. Even if a business just handles the product it can make them responsible, so it is [needed for retailers](https://www.financedigest.com/why-challenger-banks-need-to-capture-the-hearts-and-minds-of-todays-consumers-to-become-the-number-one-choice-in-the-retail-banking-sector.html "Why challenger banks need to capture the hearts and minds of today’s consumers to become the number one choice in the retail banking sector") and shop owners and not just manufacturers.
4. _Professional indemnity_ [insurance – An insurance that will be useful if the business offers customers](https://www.financedigest.com/customer-engagement-in-the-insurance-sector.html "Customer engagement in the insurance sector") advice or a professional service. It covers the cost of [business mistakes](https://www.financedigest.com/5-common-tax-mistakes-small-businesses-make-in-australia.html "5 Common Tax Mistakes Small Businesses Make in Australia") that have resulted in financial loss or injury for customers due to negligent advice.

**Material damage insurance**

Similar to liability insurance, material damage insurance has various different types of cover which will suit different business needs. It will protect business property and equipment whether it is damaged, stolen or lost. Here is a short overview of the types of cover:

01. _Business buildings insurance_ – A very important insurance to have if work is [conducted from a premises that is owned by the business](https://www.financedigest.com/what-green-criteria-sustainable-finance-houses-look-for-when-conducting-due-diligence-and-how-businesses-seeking-to-attract-investment-can-get-their-house-in-order.html "What green criteria sustainable finance houses look for when conducting due diligence, and how businesses seeking to attract investment can get their house in order"). It will cover losses if the business buildings or premises are damaged due to floods, storms, fires, and theft damage.
02. _Business contents insurance_ – This insurance will cover property that is in the business building. Including machinery, computers, equipment, and office furniture. This can be useful even if a company doesn’t own the building.
03. _Stock insurance_ – Various businesses have [money](https://www.financedigest.com/how-to-save-money-on-business-tripsabroad.html "How to save money on business trips abroad") invested in goods that are stored on the business premises such as warehouses, shops and restaurants. Stock insurance will help a business claim for stock that is damaged, lost or stolen.
[Motor fleet insurance style=”font-weight: 400;”> – Third-party insurance is compulsory on vehicles but businesses should consider comprehensive insurance to cover their own losses.](https://www.financedigest.com/2020-the-paradoxical-year-that-has-reshaped-the-future-of-motor-insurance-and-related-sectors.html "2020: The paradoxical year that has reshaped the future of motor insurance and related sectors") [Motor fleet insurance](https://www.financedigest.com/uk-motor-and-home-insurers-headed-for-heavy-losses-ey-warns.html "UK motor and home insurers headed for heavy losses, EY warns") enables all company vehicles and drivers to be covered in a single policy and it covers employees if they have an accident that that damages one of the business vehicles, another vehicle or injures people.05. _Plant insurance_ – A plant policy is a useful insurance for contractors and tradesmen take [expensive equipment to places of work away from the main business](https://www.financedigest.com/5-practical-ways-to-manage-your-business-expenses.html "5 Practical Ways To Manage Your Business Expenses") premises. This policy means they can claim compensation if it is lost, damaged or stolen.

**Other types of insurance**

    - **Business interruption insurance** – This type of insurance will cover for a loss of profit or increased costs due to an unexpected [event meaning business](https://www.financedigest.com/how-to-bring-business-and-charities-together-through-events.html "How To Bring Business And Charities Together Through Events") can’t carry out business as usual. It can vary from one insurer to another, so it is vital that businesses check what they are [paying](https://www.financedigest.com/uks-sunak-to-halve-support-that-helps-businesses-pay-fuel-bills-the-times.html "UK’s Sunak to halve support that helps businesses pay fuel bills -The Times") for with there being no standard business interruption wording.
    - **Cyber insurance** – It can offer protection for a business that is [targeted](https://www.financedigest.com/schneider-and-greenyellow-target-smaller-businesses-with-energy-saving-technology.html "Schneider and GreenYellow target smaller businesses with energy saving technology") by cyber criminals and has resulted in loss of business, financial loss, public relations, legal costs and liability.

**Is business** [insurance needed?](https://www.financedigest.com/reasons-you-need-a-car-insurance-when-driving-in-thailand.html "Reasons You Need a Car Insurance When Driving in Thailand")

Business insurance is most definitely [needed with some types](https://www.financedigest.com/breaking-down-the-types-of-insurance-you-need.html "Breaking Down the Types of Insurance You Need") of insurance compulsory in the UK. Including employers’ liability insurance if a [business employs people or if a business owns a premises with a mortgage](https://www.financedigest.com/aon-assists-freddie-mac-to-reach-5bn-risk-transfer-milestone-for-u-s-mortgage-credit-business.html "AON ASSISTS FREDDIE MAC TO REACH BN RISK TRANSFER MILESTONE FOR U.S. MORTGAGE CREDIT BUSINESS"), the lender will make sure the business has buildings insurance.

Other types of insurance that a business will need to take out will depend on the kind of work and the size of the company. In some lines of work, [customers may insist businesses take out specific types of insurance](https://www.financedigest.com/5-ways-a-ccm-platform-can-help-improve-customer-engagement-in-insurance.html "5 Ways a CCM platform can help improve customer engagement in insurance").

**Should companies use a** [broker for business insurance?](https://www.financedigest.com/classic-car-insurance-broker-launches-future-classic-investment-guide.html "Classic car insurance broker launches Future Classic investment guide")

Business insurance brokers will be [experts](https://www.financedigest.com/6-expert-tips-to-turn-your-photography-passion-into-a-business.html "6 Expert Tips to Turn Your Photography Passion into a Business") in this field and due to the complex nature of business insurance cover, a broker will be able to provide advice on the business insurance policies that will best suit a business.

The last [thing a business wants is an insurance](https://www.financedigest.com/ten-things-youre-doing-that-are-invalidating-your-car-insurance.html "TEN THINGS YOU’RE DOING THAT ARE INVALIDATING YOUR CAR INSURANCE") claim being refused because they haven’t taken the right level of cover out or the wrong policy. A broker will help avoid this problem and give [business owners peace of mind that everything needed](https://www.financedigest.com/5-reasons-why-you-need-to-step-into-your-ceo-role-as-a-small-business-owner.html "5 Reasons why you need to step into your CEO role as a small business owner") is covered.


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