Insurance

Business interruption insurance covers financial losses — lost revenue, fixed ongoing costs and additional expenses — that a business suffers when it cannot operate normally following an insured event such as a fire, flood or storm. It typically pays out for the period of interruption up to a maximum indemnity period, most commonly 12 or 24 months. Policy wording is critical: the COVID-19 pandemic and subsequent Supreme Court ruling in FCA v Arch (2021) highlighted that many policies did not respond to pandemic-related closures unless specific disease or denial-of-access clauses were present. Businesses should review their policy trigger clauses carefully.

Cyber liability insurance covers the costs arising from data breaches, ransomware attacks and other cyber incidents. A typical policy covers ICO notification costs, forensic investigation, customer notification, legal costs, regulatory fines (where insurable), business interruption losses and extortion payments. As cyber threats have grown, many B2B clients now require suppliers to hold minimum cyber cover as part of their supplier-vetting process. First-party cover addresses the business's own losses; third-party cover addresses liability to customers or partners whose data was compromised. Premiums depend on turnover, sector, volume of personal data held and existing security controls.

Directors and Officers (D&O) insurance protects individual directors and senior officers against personal liability claims arising from management decisions and actions taken in their capacity as a director. It covers legal defence costs and any damages awarded in claims alleging wrongful acts, mismanagement, breach of fiduciary duty, errors in financial reporting, employment disputes and regulatory investigations. It is particularly important for companies seeking investment, as investors often require D&O cover as a condition of funding. Unlike public liability or professional indemnity, D&O insurance is designed specifically to protect individuals rather than the company.

Employers' Liability (EL) insurance covers a business against claims from employees who are injured or made ill through their work. It is a legal requirement under the Employers' Liability (Compulsory Insurance) Act 1969 for almost every business with staff, with a minimum cover of £5 million. The certificate must be displayed or accessible to employees, and failure to hold EL cover carries fines of up to £2,500 per day.

Goods in transit insurance covers goods while being transported by road, rail, air or sea against loss, theft or accidental damage. It is essential for removal companies, couriers, freight carriers and any business regularly transporting stock or client property. British Association of Removers (BAR) member firms are required to hold goods-in-transit cover as a membership condition. Coverage limits should reflect the full replacement — not depreciated — value of the goods carried. Policies typically exclude inherent vice, inadequate packaging and unattended vehicles, so businesses must understand their exclusions before making a claim.

Product liability insurance covers claims for personal injury or property damage caused by a defective product that a business supplies, manufactures or designs. It is not a legal requirement in the UK, but is strongly recommended for any business in the supply chain for physical products — including retailers, importers and own-label suppliers. It is often sold as part of a combined public and product liability policy. The Consumer Protection Act 1987 makes producers strictly liable for damage caused by defective products, meaning fault does not need to be proved — making this cover essential for product-based businesses.

Professional Indemnity Insurance (PI) protects businesses that supply advice or professional services against claims of negligence, errors or omissions in their work. It is mandatory for solicitors, accountants and architects under their professional body rules. Typical cover starts at £100,000 and scales with contract value. Unlike public liability, PI specifically addresses financial loss arising from intellectual work rather than physical injury.

Public Liability Insurance covers a business against claims of injury or property damage caused to third parties — customers, suppliers, members of the public — during the course of trading. Cover typically runs from £1 million to £10 million in the UK. Although not legally mandatory for most trades, it is contractually required by most clients, landlords and platforms. It is distinct from Employers' Liability, which covers staff.

The public liability limit is the maximum amount an insurer will pay for any single claim or in aggregate under a public liability policy. Standard limits for small businesses are £1 million, £2 million or £5 million. Some clients, local authorities and contracts specify a minimum limit — often £5 million or £10 million — and businesses that cannot demonstrate adequate cover may be excluded from tendering. If a claim exceeds the policy limit, the policyholder becomes personally liable for the excess, which can be catastrophic for a sole trader or small company. Higher limits cost relatively little extra and are generally advisable for businesses working on larger sites or with members of the public regularly.

Public Liability and Employers' Liability are two separate insurance products often sold together. Public Liability covers injury or property damage to third parties (customers, members of the public) and is contractual rather than statutory. Employers' Liability covers injury or illness suffered by employees in the course of their work and is legally compulsory for almost every UK business with staff — minimum £5 million cover, with the certificate displayed at the workplace.

Tools and equipment insurance covers tradespeople and contractors for loss or theft of their tools and equipment, including those kept in a van overnight. Standard public liability and vehicle insurance policies generally do not cover tools, making a dedicated policy essential for sole traders and small contractors whose income depends entirely on their kit. Policies specify a single-item limit and an overall limit; high-value items may need to be individually listed. Theft from an unattended vehicle is one of the most common claims and many policies apply specific conditions — such as requiring tools to be stored in a locked, steel-lined van and out of sight.

Trade credit insurance protects businesses against the risk that a B2B customer fails to pay an invoice because of insolvency, protracted default or political risk in export markets. Insurers typically cover 75% to 90% of the outstanding invoice value, with the business retaining the remainder as a co-insurance excess. Also known as accounts receivable insurance or debtor insurance, it allows businesses to extend credit confidently to new customers and enables higher borrowing against insured receivables. Premiums are based on the business's turnover, customer credit quality and claims history.