The Ultimate Business Insurance Guide

business insurance guide - shieldwise
by shieldwise

To operate a business, owners must understand that the venture can bring great success or financial bankruptcy. Regardless of size or industry, the risk of running a business without essential legal protection as shown in this business insurance guide, can lead to financial ruin. As the size of a business continues to grow, so does the number of unforeseen events and legal disputes it is likely to face. To remain protected against these potential incidents, it is important for businesses big and small to invest in business insurance as we’ll explain in our business insurance guide. Here at ShieldWise, we have composed an easy-to-read guide to help you better understand the inner workings of business insurance policies and pricing mechanics.

What is Business Insurance?

Business insurance is a policy set in place to protect businesses against the financial risk of incidents that occur during regular business operations. Whether it is property damage or a compensation claim, business insurance can provide a company with the necessary financial and legal support needed to address the issue at hand.

How does business insurance work?

When investing in a business insurance policy, you are required to pay an agreed premium rate that guarantees coverage. The size of this premium rate is dependent on the business’ size, location and the deductible paid before coverage begins. In the event an incident covered by the policy occurs, the policyholder will receive a financial payout from the insurance company. This payout is used to cover any financial loss incurred from addressing the incident.

What types of business insurance policies are there?

As previously mentioned, when it comes to business insurance there are a variety of policies to choose from, each with different premium prices and benefits. To make the most of the coverage available to you, it is important to understand the different types of policies you can apply for in the UK. Here in the UK, you can find:

Public Liability Insurance

Occasionally referred to as “commercial liability”, public liability insurance is a policy plan that provides cover against claims of injury, illness and or/loss made by the public. These claims can include injury on business property, suspected food poisoning after consumption of a product, and damage of customer property. If a claim is filed by a policyholder, this insurance plan provides the necessary financial support to cover the cost of any legal defence fees and compensation payments.

Though owning this policy may not be mandatory by law, some business sectors are required to have a certain level of public liability cover before they are licensed to trade. Depending on the business type, having commercial liability cover can serve to not only protect a business but also ensure that it adheres to the regulatory demands of certain trading authorities.

With business growth comes an increased likelihood of public liability claims being made, to deal with this issue, business owners must ensure that they invest in an adequate liability cover plan that will aid them when the time comes.

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Professional Indemnity Insurance

Professional indemnity insurance is a policy that provides cover against claims of professional negligence and/or mistakes made by a customer. In the realm of business, nothing possesses more weight than the reputation a business upholds. The influence of a business’s reputation can help it ascend to greatness or collapse in bankruptcy. For this reason, some insurance companies offer professional indemnity plans that protect their clients against issues of defamation, negligence, and breaches of consumer law.

This policy is designed to provide the necessary financial support needed to cover the cost of any legal defence, compensation payments or additional costs required to deal with a customer claim. Due to the variety of business industries, most professional indemnity plans charge a premium based on the value of a business’s project and the risk of the industry. This insurance plan is crucial for small businesses that offer consultancy or accountancy services.

Employers’ Liability Insurance

As an employer, a business owner is responsible for the health and safety of their employees as they work. In the event an employee suffers an injury in the workplace, an employer could be made liable for the incident and face a fine. To deal with this potential issue, employers’ liability insurance policies offer coverage that protects businesses against compensation claims made by employees that report work-related illnesses or injuries.

This policy plan provides coverage for all legal costs and compensation pay demands a business is required to adhere to if a claim goes to court. Due to the importance of workplace safety, employers’ liability insurance is a legal requirement for most businesses in the UK that operate with paid and unpaid employees. Many insurance companies offer a minimum cover of £5 million, meaning if a small business must face a potential claim, they are able to deal with the matter without suffering heavy financial loss.

Business Buildings Insurance

Whether it is a family restaurant that has remained at the same location for decades or a large corporation that lives in the centre of the city, a business’ property is one of its most important assets. To help protect this asset, many business owners look to acquiring business building insurance.

Sometimes referred to as “commercial building insurance”, business building policies are designed to protect a business if their property suffers damage from a fire, burst water main or burglary. Providing aid when a property damage incident occurs, this policy plan offers financial support to help cover the cost of property repairs or rebuilding. Depending on the provider, some building insurance policies offer additional perks that can include, legal cover, business interruption protection and business contents insurance.

Though it is not a legal requirement to have business building insurance, most business owners would be wise to get this insurance policy to be on the safer side. In cases where a business owner operates from a house with a mortgage, it is not uncommon for lenders to advocate business building insurance.

Business Income Insurance

With the recent outbreak of COVID-19, it would be wise for business owners to consider preparing for the likelihood of another crisis occurring that could cease trading. While other insurance policies offer protection, most policy types do not provide cover in the event of an incident that can affect trading for a long period. Incidents including fires, floods, disease outbreaks, and other “acts of god” events are typically not covered by other policy plans.

Business income insurance, sometimes referred to as “business interruption cover” is a policy plan developed to provide cover in the event of a crisis that leaves a business unable to trade. Policyholders who file a claim will receive financial support to help pay the necessary costs needed to stay afloat during the suspension of business. The presence of this policy has prevented a large majority of businesses from going bankrupt during the recent global pandemic.

Business Contents Insurance

Business contents insurance is a policy geared towards providing cover for businesses that rely on their equipment. Crucial in many industries, a business’s equipment can be considered a key attribute to its success. With the UK in its third national lockdown, the risk of burglary is at an all-time high as streets run empty and shops remain unattended for weeks. To prevent any issues that may arise from equipment damage or theft, this policy type provides the necessary financial support needed to quickly fix or replace any equipment covered.

For small businesses that operate from home, business contents insurance may prove to be a better investment than normal house insurance. Though house insurance policies normally cover most items within a home, the level of cover provided to business equipment and stock is typically low. To minimise the financial impact a burglary or house fire can have on a business’ success, business owners that use their homes as a base of operations should consider investing in a business contents policy.

Liquor Liability Insurance

As the name implies, liquor liability insurance is a policy designed to protect businesses that manufacture, serve, or sell any form of alcohol. Due to the intoxicating influence of alcohol, this policy provides cover against claims of bodily injury or property damage made by an individual that became intoxicated after consuming alcohol sold by the policyholder. In the event a claim is made, the policyholder will receive financial support to cover any legal fees, settlements, and medical costs attributed to the incident.

This policy plan is ideal for business owners that wish to establish a bar, restaurant, brewery, or grocery store. Depending on the business type, it may be mandatory by law to have some form of liquor liability coverage before a business can begin trading. Regardless of size, any business that sells alcohol would do well to request a liquor liability policy to avoid the potential headache that may come with increased claims once the national lockdown is lifted.

Business Vehicle Insurance

Sometimes referred to as “commercial vehicle cover”, business vehicle insurance is a policy plan that provides protection to policyholders that use a vehicle to travel to different locations, operate their business and/or transport employees. Though it is mandatory by law to have normal car insurance in the UK, most personal car insurance policies do not offer the same level of coverage as business vehicle insurance. While business vehicle insurance protects is clients during business-related activities, standard car insurance policies only provide cover for social use and commuting.

This policy plan is ideal for policyholders that operate handyman and delivery businesses. Depending on the provider, clients can receive a lifetime repair guarantee or a replacement vehicle if the damage is too severe. Additionally, policyholders that keep equipment in their vehicles can expect replacement cover if the vehicle is stolen or destroyed. For any start-up businesses that look to provide a service across different areas must ensure they invest in this policy type.

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What factors influence business insurance prices?

Establishing a business is a venture that is often an amalgamation of different attributes and events that led to its conception. Similarly, insurance companies use several factors to assess the risk of providing coverage to a business. This risk is often the determining factor of how much an applicant will be quoted for requested protection. Though harsh, this assessment is considered necessary for insurance companies to ensure they are not providing coverage to an untrustworthy business.

To help you better understand what aspects of your business may be affecting your chances of getting cheap business insurance, the following section will highlight some of the key factors insurers consider when pricing policies.

Business Risk

Simplistic in its identification, some business owners are blind to the level of risk associated with establishing a business in a particular industry. For example, if a construction worker were to request insurance coverage for their business, the number of events that could lead to a claim would be at a higher rate than that of a grocery store. To deal with this potential issue, insurance providers often charge a higher premium depending on the level of risk associated a business.


Pretty straight-forward, if a business operates in a highly-populated area or in an area with a high crime rate, they will be expected to pay a higher premium rate. Operating in a densely populated area can often leave a business susceptible to burglary and vandalism incidents. The increased probability of crime in an area typically correlates with an increased claim rate.


This factor has more to do with the number of employees a business manages. As highlighted earlier, it is often a legal requirement to have employee liability insurance in the event of any injury or illness claims. The more employees an insurance company must cover, the higher the premium rate a business must pay.

Level of Coverage

Typically, the more cover a person request, the more they will pay. Depending on business type and industry, business owners may at times be required to apply for several different insurance policies to remain protected against different potential risks. Not all policy types are valued the same, meaning some cover plans could be the reason as to why a client’s quoted premium rates are so high.

Claims History

In some cases, insurance companies will look at your past claim history to see if there is a potential track record. Depending on the business industry, it is not uncommon to have businesses file multiple claims during their tenure. Some claim types are typically more frequent and as such can have an influence of the premium price you pay. For example, if a few drivers of a taxi business have been in accidents that have led to vehicle claims, an insurance company is more inclined to charge you a higher premium on your business vehicle policy.

Business Activity

When dealing with business liability insurance, some insurance companies like to assess the level of activity generated by a business before they decide on a quote. In instances where businesses have managed to double their revenue in a year, it is not uncommon to see insurance providers charge an increased fee on the next renewal.  Though it may seem unjust, it is important to remember that with increased business comes an increased likelihood of a liability claim or incident occurring. As a business excels, so does its recognition and insurance prices.

What can be done to reduce the cost of business insurance?

Read the Fine Print

It is important for business owners to make sure they read the fine print of any insurance policy agreement. In many cases, clients have found themselves signing up for additional fees and limitations not overtly advertised during their application. Going through the fine print can be a great utility for finding affordable business insurance.

Choose a Higher Deductible

Another avenue a business can take in reducing its premium rate is by paying a higher deductible at the start of their coverage. Though this can incur a high cost at the beginning, paying a higher deductible often results in a lower monthly and annual premium.

Improve Business Safety Records

One of the ideal approaches to reducing liability premiums is for a business to show a good track record of placing safety at the forefront of their priority. Establishing a safe environment for employees and customers can lead to cheaper liability insurance.

It is important to remember that while companies offer different package variations, there is no guarantee that they will be applicable to your business. Sometimes, the better option is to look for cheaper standalone policies that suit your business structure and meet your needs.

Explore Policy Packages

With the varying types of insurance policies available to clients, it can often prove quite costly for business owners to invest in different individual cover plans. To help alleviate the burden of paying multiple premiums at once, some insurance companies make use of a package deal structure. Like most package deals, this approach combines a few different policies into a single plan that offers a broad range of coverage at a single premium rate.

The most recognisable package deal offered by insurance companies is the business owner policy or BOP for short. This package typically offers protection for all major property and liability risks associated with a business. Due to the diverse range of cover needed for specific sectors, it is common to find insurance companies that offer BOP variations designed to meet the needs of different business industries. Clients who choose this package also have the option to opt-in for additional coverage, such as cybersecurity, crime, and forgery protection.

Which is better: Standalone or Package deals?

When choosing between standalone policies and package deals, it is important for a business to assess what coverage they need. While package deals are normally cheaper, this does not always translate into being the cheapest option. Depending on the business type, some package deals may either lack ideal coverage or offer coverage that is non-applicable to the policyholder. For example, a business owner that operates a digital marketing firm from their home would not benefit from a package that does not include business content and professional indemnity insurance.

List of reliable insurers in the UK

The Hartford

Specialists in providing coverage for small businesses, Hartford has established itself as a business insurance company that caters to the needs of its clients with great service and claim support. Clients that make use of Hartford’s services have access to the Spectrum package that combines the coverage features of business owner, general liability, and business building policies into one plan.


Providing several professional insurance products, AXA is an insurance company that strives to offer great service and coverage regardless of business size. Clients that use AXA business insurance services can the option to choose between conventional and online business insurance.

Direct Line

Recognizable by many UK citizens, Direct line is known for its broad coverage services that spread across many different business sectors. When it comes to insurance cover, Direct Line can cover any businesses standard needs.


Showcasing the highest claim payout rate during the COVID-19 pandemic, Hiscox is well-known for its specialist approach to liability coverage and service. Hiscox is the ideal location for small businesses that operate with under 5 employees.

Lloyds Bank

Lloyds Bank is one of the few banking establishments that offer great banking services and business insurance products. Having connections to one of the largest insurance brokering groups, Lloyd’s products are sourced from a panel of providers to ensure the price remains competitive.

How to find an affordable insurance policy

With the vast number of insurance providers offering similar plans at different prices, it can prove both difficult and time-consuming to find an affordable insurance provider without the use of a comparison site. The use of a comparison site can help a business owner sift through thousands of insurance policies to find the one that is suitable for them.  

If you are unsure about what comparison website to use, we at ShieldWise have you covered. With an ethos to provide an exceptional platform that helps our customers find the right insurance provider, we offer a comparison service that instantly locates affordable insurance plans that meet your demands.

Here at ShieldWise, we help you save money, time, and your sanity.

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Categories: Business Insurance