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The advantage of business insurance is that is can protect small companies from such things as liability claims or physical damage to property and equipment.

Business insurance generally covers things that are a necessity for your business or recommended to cover. You can find out more here: business insurance explained

The main ones are:

• Professional indemnity insurance
• Public liability insurance
• Employers’ liability insurance
• Business premises insurance, often called commercial buildings insurance
• Business assets insurance, often called business contents insurance
• Other specialist policies

If, during the course of your business activity, you injure a third party or cause damage to their property, public liability insurance will cover the cost. It is highly advisable for you to take this out or you could face bankruptcy if someone makes a public liability claim against your company.

Employers’ liability insurance offers protection for employees in the event they claim compensation as a result of being injured or becoming ill due to their work. This is a legal requirement for all UK-based employers.

This type of cover is advisable if:

• You offer advice or services for a fee
• You or your employees regularly work off site
• You have visitors to your business premises
• You employ or supervise people
• You are not legally protected by union membership

When you take out your policy, check you insure your property and its contents accurately.

Some of the other factors that have an impact on cost are:

• How much cover you need
• Size of your business
• Type of work you are engaged in
• Location
• Previous claims
• How long you’ve been in business

Employers’ liability insurance is the only aspect of business insurance that is a legal requirement.

Business interruption insurance provides cover in the event you lose money as a result of not being able to trade or work. An example is if theft, damage or loss of stock or equipment occurs. It also covers any additional costs you may need to get your business running again.

Employers’ liability insurance is the only feature of business insurance that is a legal requirement. You may find the other areas of business insurance are not appropriate to your business type; however, it is important to protect your business, your employees, the interests of your clients and the general public, with adequate cover.

For answers to any further questions, see our business insurance guides