Businesses face many risks – from physical damage to lost revenue to personal injury court cases. To help them keep afloat after losses, businesses can buy many types of business insurance that cover liability and direct damage as well as protection for employees. Our guide will help you consider which types of insurance work best for your company.
Accidents can happen and any business runs the risk of losing its reputation, cash flow and ability to survive if disaster strikes.
If an employee makes a mistake or a customer slips on your property, you could be liable for costs or get sued. Let’s say you’re a plumber and you incorrectly fix a pipe for a restaurant, which forces it to stop operating for a month. You could be forced to pay out what the restaurant would have earned in that time.
This is why business insurance exists. It offers protection for a range of things like getting sued and much more. If you don’t have insurance, you might have to pay for damages out of your own personal finances.
Types of risks that businesses take
Injuring someone. Someone slips in your retail shop and sues you for medical bills.
Damaging property. You own a car wash and one of your employees spills a chemical inside a car.
Selling faulty products. You accidentally sell fruit contaminated with E. coli and your customers get sick.
Giving incorrect advice. You provide a client with a flawed building design that needs repairs after it’s built.
Financial mismanagement. Your company breaches safety or industry regulations and has to pay fines.
Accidents outside your control. Your business faces a theft, fire, storm, damage or other disaster.
What are the different types of business insurance?
There are a few different types of business insurance policies out there, so you will need to decide which one is the right one for you. Below are examples of some of the types of business insurance you can find cover for:
Make sure you cross these off your list. We’ve made a table to help you determine which of the three main types of business insurance you may need:
If your business…
You run the risk of…
Insurance can help with…
Product liability insurance
Designs, produces or manufactures a physical product (e.g. assembly, design firm or takeaway food)
Supplies or installs a physical product (e.g. electrician, online distributor or retailer)
Your product causing damage or loss to people or property
Your product failing to fulfil a promise or responsibility
Claims of faulty installation
Court and legal fees
Compensation and damages costs
Public liability insurance
Has publicly accessible premises (e.g. supermarket, dentist or restaurant)
Performs services in public places (e.g. road workers, personal trainers or event organisers)
People injuring themselves on your premises
Property being damaged or stolen
Claims of negligence or dereliction of duty leading to financial loss
Court and legal fees
Compensation and damages costs
Professional indemnity insurance
Gives advice (e.g. consulting or medical)
Provides a service (e.g. building surveyor or IT professional)
Claims of incorrect, misleading or damaging advice
Accusations of poor or fraudulent service
Claims of faulty installation
Court and legal fees
Compensation and damage costs
Public relation fees
Cost of investigation into the claim
Cyber liability insurance
Web-based businesses
Businesses that rely on digital data
Cyber breaches
Data theft
Business interruptions
Court and legal fees
Lost business revenue
Public relation fees
The cost of theft
Management liability insurance
Companies with:
Team of managers
Directors
Corporate bonds
Employee claims for wrongful dismissal
Financial penalties for occupational health and safety breaches
Financial penalties for directors breaching their duty
Court and legal fees
Public relation fees
Fines
Frequently asked questions
Like most insurance quotes, it depends on circumstance. The amount you pay for coverage depends on what type of business you’re running, how many people you employ and what risks you run. If you’re running a light team of 4 or 5 librarians, your insurance will cost less than if you have 50 architects planning homes across the country.
Nearly every business can benefit from having some form of insurance coverage in place. It offers financial protection against a large number of common risks, giving you peace of mind that your business will be able to survive if something goes wrong.
Factors such as the type of coverage you apply for, the size of your business, where it is located, the type of business you run and your claims history can all have an influence on your insurance premiums.
It depends on what’s causing your drop in business. Risks such as an economic recession where demand for your product or services may fall or a close competitor infiltrating your market are not covered by business insurance. But business interruption insurance can cover revenue lost after an unpredictable disaster like a fire or flood.
Business interruption insurance covers a business for the loss of revenue that it suffers following an unforeseen event. This means that while the business is being repaired, cash will be provided to account for the loss of revenue but not for personal income.
Check to make sure that the limit in your policy is high enough to cover your business if it shuts down for an extended period of time. Building fires and floods can shut a business down for months or even years.
Most insurers will let you make a claim online or over the phone, though the process can vary between providers. In most cases, you will need to supply proof of ownership or legal responsibility and as many details as you can about your claim.
The offers compared on this page are chosen from a range of products we can track; we don't cover every product on the market...yet. Unless we've indicated otherwise, products are shown in no particular order or ranking. The terms "best", "top", "cheap" (and variations), aren't product ratings, although we always explain what's great about a product when we highlight it; this is subject to our terms of use. When making a big financial decision, it's wise to consider getting independent financial advice, and always consider your own financial circumstances when comparing products so you get what's right for you.
Danny is a publisher at Finder specialising in car, life, home, business and pet insurance. He previously worked at the global insurer Aon and has appeared in national media giving advice on insurance. Danny holds a BA in International Business from the University of Plymouth and has undying loyalty to his average-poor football team, Portsmouth FC.
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