Blog>Trade>Starting a Business>Do businesses need insurance? The ultimate lowdown
Last updated: 7 March 2024
Do businesses need insurance? The ultimate lowdown
With so many rules, regulations, and policies on the insurance market, knowing exactly what type you might need as a business owner can be hard. We're cutting through the upsells and nice-to-haves to help make sure you know what you need to keep your head above water and your company protected.

In this article you'll find:
You might think the answer to 'do businesses need insurance?' is an easy 'absolutely'! However, the yes is more complicated than you think. You can't just get any old business insurance and call it a job done. Your assets and liabilities for your unique business need assessing to work out the most cost-effective and comprehensive insurance available to you.
Of course, there are also types of insurance you might need and types of insurance you might want. We're going to take a look at all the possible options on the market. Plus we'll break down what each of them is, how they can protect you, and whether they might be worth investing in.
Why do I need business insurance?
The main reason to take out business insurance is to protect yourself. It is designed to safeguard you in the unfortunate event there's an incident or things go wrong.
We all make mistakes sometimes – personally or professionally. But unlike your personal life, a sorry doesn't always cut it. Customers often want compensation. The right business insurance offers settlements, avoids court costs or long legal battles, and stops you having to fork out. Certain types of insurance also cover you for losses in the event of sickness or interruption to your business.
Please note: Employer’s liability insurance is often a legal requirement if you have employees in the UK. Under the Compulsory Insurance Act 1969. Furthermore, regulatory bodies or trade associations might stipulate the need for certain insurance policies. They could include professional indemnity, for those working for limited companies.
Insurance can be expensive. So, to help you get covered for less and keep on working, we’ve partnered with insurance specialists to give Checkatrade tradespeople 20% off public liability insurance.**
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Checkatrade members get 20% off public liability insurance**
What type of business insurance do I need?
As a tradesperson, there are three main types of insurance worth considering:
Public liability
Employers liability
Professional indemnity
Let's take a look at what each of them does, how they can protect you, and if you might need them.

Public liability insurance (PLI)
Public liability insurance covers the costs for public incidents associated with your business activities. That includes personal injuries and loss of or damage to your customer's property.
For example, suppose a member of the public makes a claim against you. For example, that your carelessness on site resulted in a broken arm due to a ladder falling on them. If they win the case, your public liability insurance would cover the cost of compensation and legal fees.
Although PLI isn't mandatory if you're a sole trader, not having it might exclude you from certain jobs and opportunities. For example, on construction sites or with larger contracts. Customers and other businesses want to know they're protected if they hire you.
All Checkatrade members must have PLI to be able to be a member, whether they're a sole trader or limited business.
The cost of public liability insurance will likely vary depending on the size of your business, how much cover you need, and how risky your work is. To help you get covered for less and keep on working, we’re able to help Checkatrade members save 20% on their public liability insurance cover.** To claim, go to the offers and discounts section of our Members Area.
Get exclusive insurance rates
Checkatrade members get 20% off public liability insurance**
Employers Liability (EL) Insurance
This is often non-negotiable when you hire people to work for or with you. As soon as you're classed as an employer, Employers’ Liability (EL) insurance is likely to be mandatory if you work in the UK. You need to take it out with an authorised insurer, and you need it to cover you for at least £5 million.
Employers' liability insurance can cover you in the event an employee is injured or becomes ill due to the work they do for your company. This kind of compensation can be costly, so EL insurance is designed to take on the associated costs, protecting both you, your company and your employees.
The cost of your insurance will depend on various risk factors, the size of your company, and the extent of your insurance requirements.
Read more about employers' liability insurance on the government website.
Professional Indemnity (PI) Insurance
Don't confuse professional indemnity with public liability insurance. They're not the same. PLI is designed to protect you from compensation claims due to accidents, while PI is designed to protect you from claims against costly mistakes you make while doing your work.
PI insurance is there in the event you mess up, or if you didn't but your customer thinks you did. It could safeguard you against any legal or financial ramifications and also potentially boost your trust factor with clients who might not work with you otherwise.

What other types of sole trader insurance is there?
Beyond the likes of PI and PL insurance, you could consider trade-specific insurance.
Tools and equipment insurance
Let’s face it – specialist equipment is often expensive. So, when it gets damaged or lost or stolen, it can be a pain to replace. Tools and equipment insurance is designed to cover portable tools and equipment as well as construction plant or machinery that you own, or even hire. And where theft is a concern, cover for equipment stored on-site or in vehicles overnight is available too.
Contract works cover
Some things go beyond our control while on a job and things get damaged as a result. Contract works cover is designed to cover a temporary or permanent structure whilst it is being built, when damaged by an insured event such as fire, flood, storm, vandalism or theft.
Stock cover
A bit like tool and equipment insurance, stock cover is designed to insure the materials you need to do your job, like wood, paint and tiles, provided they’re stored safely and securely.
Personal accident cover
Accidents and injuries pose a real risk to your ability to work. In the event of serious injuries or death, personal accident cover is designed to pay out a cash benefit, while you’re getting back on your feet.
Did you find this blog helpful? If so, read our other helpful trade guides for even more advice!
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Content disclaimer
This content has been created for general information purposes and should not be taken as formal advice. Read our full disclaimer here.
*Claims are sourced from a survey conducted by Deep Blue Thinking on a nationally representative UK sample in November 2021.
** T&Cs Apply
The discount offer of 20% off Public Liability for Checkatrade Members (‘the Offer’) is only available to Checkatrade Members who are new Superscript customers. The Offer will be applied to your Superscript policy for a lifetime (applied continuously at renewal). You will be informed of any price changes in good time, prior to the anniversary of your policy.
The Superscript Offer will not apply to cancellation fees, and cannot be retrospectively applied. In the event that you cancel your Superscript policy within the first 6 months of cover, we reserve the right to deduct, withhold or charge the total value of the Offer from any payments due to or from you.
To be eligible, you must have been directed from Covea or Checkatrade by clicking on the appropriate link or receiving an email directly. The Offer is not assignable and will be automatically applied to your account by Superscript. It will be applied each month, regardless of annual or monthly payment option selection. There is no cash alternative.
The Offer cannot be used in conjunction with any other Superscript offer, voucher or promotional benefit. The Offer is subject to eligibility requirements. We reserve the right to withdraw the Offer at any time. Terms and conditions are subject to change and you may not be informed. Enro Ltd t/a Superscript is authorised and regulated by the Financial Conduct Authority.