Essential insurance for UK businesses: Don't get caught uncovered
Running a business is challenging enough without unexpected legal claims, cyberattacks or compensation payouts. Here’s a guide to four essential types of insurance every UK business should have.
Scott Brown ● Jul 22, 2025
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Employers' Liability Insurance
What it is: If you employ anyone, even just one person, Employers' Liability Insurance (ELI) is compulsory in the UK. It protects your business if an employee becomes ill or is injured while working for you.
Even a relatively minor workplace injury could result in a legal claim that brings significant legal fees and compensation costs. Employers must hold ELI of at least £5 million. Certificates need to be accessible to employees, with potential fines of £2,500 per day for non-compliance.
Why it matters: ELI is a legal requirement in the UK and provides essential protection against the financial risks associated with workplace accidents or illness. Without it, you not only face legal penalties but also the possibility of costly claims that could disrupt your business operations.
Key exemptions: Some businesses do not need ELI, including:
- Companies that only employ a single employee who holds at least 50% of the company's shares.
- Employers only employing someone based abroad are exempt; however, insurance is required if the employee spends more than 14 days continuously in Great Britain.
- An incorporated company run by its owner, who is the sole employee, is also exempt.
Public and Product Liability Insurance
What it is: Whether it’s a client tripping over a step to get into your office or a product causing accidental harm, Public and Product Liability Insurance ensures you're covered when third parties are affected by your business operations. This type of insurance covers compensation costs and legal fees if someone (excluding employees) suffers injury or property damage connected to your business.
Why it matters: Public and Product Liability Insurance helps safeguard your cash flow and business reputation by covering legal fees and compensation payments, providing peace of mind should an accident or product-related issue arise.
Directors & Officers (D&O) Insurance
What it is: Being a company director comes with significant personal risk, and Directors and Officers (D&O) Insurance protects you against claims for alleged mistakes or breaches of duty. Without it, you could face legal costs personally, putting your savings, property and financial security at risk. Claims against directors are increasing, driven by stricter rules on health and safety, employment law, environmental issues and corporate governance.
It’s not just large companies; directors of small businesses, charities, and residents’ associations can also be held personally liable for a variety of claims, including:
- Regulatory investigations
- Shareholder disputes
- Health and safety breaches
- Misleading statements
- Breaches of fiduciary duty
D&O Insurance covers legal defence costs and compensation claims, whether for an honest mistake, a misleading statement or a failure to meet your duties. You don’t have to be guilty to be sued. Many directors have been held liable simply for not exercising enough care, making this type of insurance a crucial protection against costly and stressful claims.
Why it matters: With increasing legal scrutiny on directors, this insurance is vital for protecting your personal assets and ensuring you can fulfil your responsibilities with confidence, without fear of personal financial loss.
Cyber insurance UK
What it is: Cybercrime is one of the fastest-growing risks for UK businesses of all sizes. From phishing scams and ransomware to data breaches, cyber incidents can cause serious disruption, reputational damage and financial loss.
If your business uses IT systems, holds customer data or processes payments, you are at risk. Many business owners mistakenly believe existing insurance covers cyber incidents, but most policies offer only limited protection. Dedicated cyber insurance provides broader cover, including:
- First-party losses: Covers your own losses, including costs for stolen data, ransomware payments, IT downtime, customer notifications, reputational harm and theft through electronic fraud.
- Third-party losses: Covers claims from customers or regulators for data breaches, privacy violations or online defamation.
With over 60% of small UK businesses experiencing cyber breaches, costing on average £65,000 to £115,000, cyber insurance is fast becoming a business essential. It also provides expert support to manage incidents and minimise reputational damage.
Why it matters: Cyber Insurance helps mitigate the rising risk of cyberattacks, data breaches, and IT disruptions. This insurance protects not only your financial stability but also your reputation, helping you recover faster from potentially devastating cyber incidents.
Cover your business
While we don’t offer insurance directly, we partner with trusted specialist brokers who can help you assess your risks and arrange the appropriate cover. If you’d like a referral, our team is happy to assist.