Business Insurance Explained

There is no such thing as a "business insurance" policy in the way there is a "car insurance" policy. The phrase covers half a dozen distinct products that often get sold together, sometimes get sold separately, and usually need to be assembled into a combination that fits the business in question. A coffee shop needs different cover from a software consultancy. A construction firm needs different cover from a yoga studio.

This guide is the hub. It explains the categories of cover, which ones are legally required, and how to think about the right combination for your business. Each section links out to the relevant detailed explainer. It is general information, not advice.

What "business insurance" actually includes

The main lines for an SME are:

• Public Liability. Claims from third parties — customers, visitors, members of the public — for injury or property damage.
• Employers' Liability. Claims from employees for workplace injury or illness. Mandatory if you have staff.
• Professional Indemnity. Claims from clients for negligence, errors or omissions in professional advice or services.
• Property and Contents. The premises, the fit-out, the stock, the equipment.
• Business Interruption. Lost income and ongoing costs when an insured event stops you trading.
• Cyber. Cyber attacks, data breaches, ransomware.
• Directors and Officers / Management Liability. Personal liability for directors. Employment Practices and Corporate Entity cover often bundled.
• Product Liability and Recall. Claims arising from products you sell. Recall costs when products turn out to be defective.
• Commercial Legal Expenses. Legal costs of running disputes — employment, contract, tax.
• Contract Works. Construction projects in progress.
• Tools and Equipment. Trade tools, plant, portable equipment.
• Trade Credit. Customers who do not pay.
• Environmental Liability. Pollution and statutory remediation costs.

Most SMEs need a subset of this list. Almost none need all of it. The exercise is matching the cover to the risks the business actually runs.

Mandatory cover (Employers' Liability)

The only insurance that UK law requires for most businesses is Employers' Liability. Under the Employers' Liability (Compulsory Insurance) Act 1969, any business with employees must hold cover of at least £5 million. The certificate must be displayed (now electronically, in most cases) and kept on record for 40 years.

There are narrow exceptions — most family businesses where all the employees are close family, some public-sector bodies — but for the typical SME with even one employee, EL cover is compulsory and the fines for not holding it are significant.

Other forms of business insurance are not legally required. They are required by contracts, by lenders, by landlords, by professional bodies — but not by statute.

Common voluntary cover

The cover lines beyond EL are bought based on the risks the business carries:

• Public Liability is bought by anybody who has members of the public on the premises or visits clients on theirs. Trade bodies and clients often require it as a condition of doing business.
• Professional Indemnity is bought by anybody whose advice or work product could harm a client financially. Required by many professional bodies — accountants, solicitors, financial advisers, architects, surveyors.
• Property and BI is bought by anybody operating from premises with stock, equipment, or revenue that depends on the premises being open.
• Cyber is increasingly bought by anybody holding meaningful customer data or running essential business systems online — which now covers nearly everyone.
• D&O / Management Liability is bought by limited companies with directors who could face personal claims for company decisions.

How to assess what your business needs

The exercise is not "what insurance is available" — that list is long — but "what would stop you trading or cost you significant money."

A short test:

1. Could you afford to defend a £200,000 claim from a customer? If not, you need liability cover.
2. Do you have employees? Then you need EL by law.
3. Do you operate from premises? Then you need property and BI.
4. Do you give professional advice clients rely on? Then you need PI.
5. Do you hold customer data? Then you need cyber.
6. Could a regulator, supplier or client dispute meaningfully damage you? Then you need commercial legal expenses.

The combination that comes out of this exercise is the foundation. Sector-specific cover (contract works, environmental, product recall) sits on top where the underlying activity needs it.

Standard cases vs non-standard cases

Most SMEs fall into a small number of patterns:

• Office-based consultancy with employees. PI + EL + PL + property + cyber.
• Tradesperson working at client premises. PL + EL + tools + commercial vehicle.
• Restaurant or café. PL + EL + property + BI + product liability + commercial legal.
• Retailer. PL + EL + property + BI + cyber.

These patterns are well-understood and quotable through standard schemes. Non-standard cases — unusual sectors, high turnover, complex supply chains, multiple jurisdictions — usually need a broker to assess and place.

The broker route — what a broker does

A broker is an FCA-authorised intermediary who assesses a business's demands and needs, picks suitable products from the market, and arranges cover. Brokers are paid by commission from the insurer or by a fee from the client.

The broker's job is the demands-and-needs assessment. They ask about activities, employees, premises, turnover, contracts and history. They identify the cover required, propose a combination, and explain the trade-offs. They also handle claims when they happen — a single point of contact rather than a different claims line for each policy.

Going direct without a broker is workable for the simplest cases. For anything moderately complex the broker's role usually pays for itself in time saved and gaps closed.

Where to go next at Revive

Revive's business insurance offering covers the main lines through the SME-focused journey at /business-insurance. For commercial legal expenses, /commercial-legal-expenses. For landlord-specific legal cover, /landlord-legal-expenses. For non-standard cases the specialist team can be reached through the same routes.

Key takeaways

• Business insurance is a combination, not a product.
• EL is the only line UK law requires for most businesses.
• The right combination depends on activity, employees, premises and clients.
• Brokers earn their place on anything beyond the simplest cases.
• Start with the risks that would stop you trading; work outwards from there.

Where to go next

• Business Insurance at Revive — /business-insurance
• Public Liability — see Public Liability Explained
• Employers Liability — see Employers Liability Explained
• Professional Indemnity — see Professional Indemnity Explained
• Business Interruption — see Business Interruption Insurance Explained
• Cyber — see Cyber Insurance Explained
• Directors and Officers — see Directors & Officers Insurance Explained
• Management Liability — see Management Liability Insurance Explained
• Product Recall — see Product Recall Insurance Explained
• Environmental Liability — see Environmental Liability Insurance Explained
• Contract Works — see Contract Works Insurance Explained
• Tools and Equipment — see Tools & Equipment Insurance Explained
• Trade Credit — see Trade Credit Insurance Explained
• Commercial Legal Expenses — see Commercial Legal Expenses Explained