How Much Does Business Insurance Cost?

Read Time:4 Minute, 12 Second

Whether you’re starting a new business or are renewing your cover, you may be wondering about business insurance costs, which start from under £100 a year but can rise into the thousands of pounds for many small businesses. How much do most small businesses pay to protect against the myriad of risks they’re exposed to, from personal injury claims made by third parties to employee injury claims? Clients can even sue, claiming a negligent service or advice resulted in them losing money. The risks come from all sides. Let’s take a look at costs for common types of business liability insurance, as well as a common add-on feature – business contents insurance.

How much does business liability insurance cost?

Small business liability insurance starts from around £85 for public liability insurance. Other types of business liability insurance include employers’ liability, which starts from around £60 per person per year, and professional indemnity, which starts from around £50 a year. But costs are really quite variable from one business to the next. So a business can end up paying multiples of those figures, depending on the risk they present to an insurer.

For example, an office-based business will probably have low employers’ liability costs compared to a manufacturing company, as these are known to be more dangerous. Companies that operate in industries with a higher risk of injury or death to workers naturally will pay more for employers’ liability insurance. Higher risk equates to a higher chance an insurer will have to pay out; consequently, employers’ liability rates are steeper for riskier businesses.

Businesses with employees are legally required to buy employers’ liability (EL) insurance. This includes temporary or casual workers, too, and those paid in cash. A business that doesn’t have the necessary EL insurance can be fined up to £2,500 a day, so even if premiums seem expensive, it can be more expensive not to buy cover, even if you never claim.

Public liability insurance starts from around £85 a year, but rates will be higher for certain businesses. For example, construction businesses will pay high public liability premiums into the hundreds or thousands of pounds per year. Public liability is one of the most common types of small business insurance. It protects against claims of injury or damage made by third parties, and it covers both legal defence costs and compensation payments. So, for example, if a visitor to a work site trips on uneven footing and falls, injuring themselves, they could sue.

Professional indemnity (PI) insurance is another important type of insurance for businesses providing professional advice, designs, or services. PI insurance costs start from around £50 but can easily escalate into the thousands or tens of thousands of pounds a year. In the current environment, post the Grenfell Tower disaster, PI rates for those involved in architecture and construction are facing a tight market with hard-to-find policies and sky-high rates. PI protects against clients who claim that you’ve caused them a financial loss due to professional negligence or a mistake.

Most businesses need insurance in one form or another. As small businesses don’t have a lot of extra money in the early days, insurance can feel expensive. But it’s critical financial protection if something goes wrong, such as a liability claim against your business.

How much does business contents insurance cost?

Business contents insurance can be relatively affordable. For example, NimblFins gathered sample quotes for a small business (a restaurant) and found that adding £10,000 of stock cover and £25,000 of contents cover added just £155 to the annual cost of business insurance for a small restaurant. Considering the level of protection afforded, the cost of cover is quite reasonable. Of course, the cost of contents insurance will vary depending on many factors, such as the building security, location of the business, type of business, amount of protection needed, and more.

Without contents cover, a small business would be responsible for covering all of the costs to repair or replace the contents owned by the business. With insurance, they’d have financial assistance so long as the event causing the damage or loss was listed as a covered event in the policy wording. Commonly covered events include fire, flood, vandalism and theft or attempted theft.

How much does it cost to register a business?

It costs £12 to register a business yourself at Companies House.

However, many small business owners prefer to use an agent to help register their business, such as Companies Made Simple. In addition to company registration, using an agent has other benefits. These can include customer support lines to call with questions, get a registered address to use for business purposes to protect your home address, maintain statutory books, and more. Some even offer cashback if you open a bank account through them. For comparison’s sake, these types of services cost in the range of £13.99 to £99.99 + VAT. So some agent packages are barely more expensive than the do-it-yourself option.