Small Business Insurance FAQs

Answering your small business insurance questions with Enterprise Nation

Last month, we joined forces with Enterprise Nation to host a Q&A on Twitter. Our #ENsuranceChat tackled common questions about small business insurance, and clarified the difference between various types of cover.

If you missed it, we’ve summarised the key points here. Read on or click on the questions below to find out more:

What are the different kinds of small business insurance?

The insurance a small business might need depends on the type of business, and also what the owner wants to cover. The three main types are public liability, professional indemnity and employers’ liability insurance.

What is public liability insurance?

Public liability provides cover for compensation claims against a business owner from customers or members of the public.

Specifically, public liability insurance covers claims that arise as a result of accidental bodily injury or damage to property arising as a result of a business’ activity.

This is necessary if, for example, a customer claims for compensation after tripping on a carpet at your business’ premises, and injuring themselves.

What is professional indemnity insurance?

Professional indemnity comes into play if a business gives customers or clients advice, covering you against claims for financial and reputational damage.

This includes situations where a client believes they’ve been given poor advice, and consequently files a lawsuit against you. In this case, professional indemnity insurance could cover the costs that result from this.

What is employers’ liability insurance?

Employers’ liability insurance is necessary if a small business employs staff, and provides cover for claims that your staff make if they suffer injury or illness arising out of their employment with your business.

It’s mandatory for all employing businesses to have employers’ liability cover and you can be fined up to £2,500 for every day that you’re not insured.

Will my home contents insurance cover my business stock too?

Having regular home insurance doesn’t automatically mean that your home-based business is covered as well, so to cover your stock at home, you should make sure you have an insurance policy that explicitly states that cover for business stock and contents is included.

At Direct Line for Business, we offer a Business from Home insurance policy, which covers your business contents, equipment, stock and also includes public and products liability.

As a sole trader, do I need business insurance?

Insurance is still crucial for sole traders. If you’re contracting to other business or working for a home owner they might request proof of insurance before allowing work to start.

Even if you’re running, for example, a small crafting business, you’ll still need the right cover and this applies whether you sell via your own site, a third party retailer like Etsy, or at craft fairs.

Is insurance needed if I’m exhibiting at a fair?

You might be asked to show your certificate for public liability insurance before you’re allowed to exhibit at a fair. Even if you’re just participating in a one-day market, you’ll need public liability at least.

And if you’re selling your products, you'll need to take out business insurance as well.

What insurance do I need for my small business if I’m selling goods overseas?

If you’re shipping products overseas, you do need business insurance.

Although the exact type of insurance that you need may vary, it’s always worth checking that any policy that you're taking out to cover your goods (both overseas and domestically) includes product liability cover.

If my business employs a freelancer, do I need additional insurance?

Potentially, yes, but this will depend on the circumstances of the arrangement that you have with the freelancer or contractor.

In most cases, both parties (the freelancer and the employer) will need to have both professional indemnity insurance and public liability insurance.

However, the arrangement that you have in place with the freelancer or contractor could mean that they are deemed as an employee while they are under contract with you. So make sure to consult your insurance provider with all of the relevant details to discuss the type of insurance that you will need to take out before you employ a freelancer or contractor.

Do consultants need insurance?

Yes! Consultants need professional indemnity insurance in place to cover their professional work and advice from mistakes or negligence.

They should also have public liability cover in case they cause any bodily injury or damage to a third party or their property.

If I’m a consultant, should I register as a limited company or sole trader?

Consultants can register either as a limited company or a sole trader. Although it’s vital that you make sure the business category that you choose when taking out your policy reflects the status of your business.

Is different insurance needed if I work away from home?

It’s not uncommon for small business owners to work away from the home. But to do so, you may need to take out some extra insurance. So make sure to talk to your insurer about what equipment you’d like to cover for use away from your home before you take out a policy.

At Direct Line for Business, our Home Business Insurance policy can cover items that are taken away from the home for business use, but you will need to declare the items that you would like to insure.

Is insurance paid for annually or monthly?

This will vary on the insurer, but at Direct Line for Business you can pay for insurance either annually or monthly. For all our policies, monthly payments are subject to 0% APR for the first year, subject to availability, and are available for people aged 18 and over.

Click here to take a look at the Q&A in full!

Enterprise Nation is the UK's most active small business network.



Small Business Insurance Press Release Jazz Gakhal
Jazz Gakhal

Jazz Gakhal
Last Updated: 26 Sep 2016