What business insurance do you actually need?

If you work for yourself or run a small firm, the legal list is short. Working out what business insurance you need starts with whether you employ anyone and whether you drive for work. Your profession, any licence you hold and your contracts can then add more.

This guide covers the law in each part of the UK and the employers’ liability exemptions. It also covers who else can make cover a condition and which optional covers fit your work.

Jump to information on:

• The law
• Employers’ liability
• Cars and vans
• Professions and licences
• Contracts and councils
• Working from home
• Your situation
• Fines
• Cost
• FAQs

Is business insurance a legal requirement?

For most businesses, only two kinds are. The Employers’ Liability (Compulsory Insurance) Act 1969 requires every employer carrying on business in Great Britain to hold approved insurance. Section 143 of the Road Traffic Act 1988 makes it an offence in Great Britain to use a motor vehicle on a road or other public place without insurance.

GOV.UK’s vehicle insurance guidance gives third party cover as the legal minimum. Northern Ireland has its own law on both duties. Motor insurance there is required by Article 90 of the Road Traffic (Northern Ireland) Order 1981, and the employer duty is covered below.

Some licences and regulators add a third requirement, set out in the section on professions and licences. For many firms the employer duty does not apply. The Department for Business and Trade’s business population estimates found that 75% of UK private sector businesses at the start of 2025 had no employees aside from their owners.

When employers’ liability is compulsory

You need it as soon as you become an employer, unless an exemption applies. GOV.UK’s employers’ liability guidance says the policy must cover you for at least £5 million and come from an authorised insurer. You can check an insurer on the Financial Conduct Authority register.

You must display the certificate where employees can access it, which GOV.UK says can be at your workplace, on your website or on a work intranet. You must also show it to inspectors when they ask. This duty covers England, Scotland and Wales.

In Northern Ireland, nibusinessinfo, the Northern Ireland government’s business guidance service, says on its employers’ liability page that HSENI enforces the same £5 million minimum. You can compare employers’ liability insurance quotes if the duty applies to you.

Who counts as an employee?

The 1969 Act defines an employee as someone working under a contract of service or apprenticeship, whether written, oral or implied. What you call the person does not settle it.

GOV.UK’s employment status guide lists the signs. Someone is probably an employee if a manager decides how and when the work is done. Other signs are set hours for pay and not being able to send a substitute.

Exemptions from employers’ liability

GOV.UK says you do not need it if you only employ family members. Its list includes your spouse or civil partner, parents, grandparents, children, grandchildren, siblings, half-siblings, step-parents and step-children. You are also exempt if you only employ people based outside England, Scotland and Wales.

In Great Britain, a limited company is also exempt if its only employee owns 50% or more of its issued share capital. This comes from a 2004 amendment to the Employers’ Liability (Compulsory Insurance) Regulations 1998. For Northern Ireland, nibusinessinfo gives the same exemption and says the family exemption applies only if your business is not a limited company.

In Great Britain, check with your insurer how the family exemption applies to a limited company before relying on it.

Using a car or van for work

Any motor vehicle you use for your business on a road or other public place needs at least third party cover. The duty in section 143 is about motor vehicles, so check how any other work vehicle is classed.

Your motor policy also needs the right class of use. Quotezone’s guide to van insurance classes of use explains the differences. Check your certificate before you drive for work, and tell your insurer about any change.

Staff who drive their own cars on your business need business use on their own policies. Quotezone’s guide to HSE’s driving for work leaflet, INDG382, covers what employers check. For a work vehicle, compare van insurance, or fleet insurance for several vehicles.

Professions and licences that require cover

Some regulators make professional indemnity a condition of practice. Each sets its own scope.

• The Solicitors Regulation Authority’s indemnity insurance rules require the firms it authorises in England and Wales to hold qualifying insurance. The minimum is £3 million per claim for licensed and recognised bodies and £2 million for other firms.
• ICAEW’s professional indemnity regulations make cover compulsory for every member who holds a practising certificate and works in public practice, whatever their practice income.
• FCA-authorised insurance and mortgage intermediaries must hold it under MIPRU 3.2 of the FCA Handbook, which applies across the UK.

The SRA’s rules cover England and Wales, so solicitors in Scotland or Northern Ireland can check their own law society’s rules. Our guide to public liability vs professional indemnity covers more regulated professions.

A few licences require public liability insurance. In England, Ofsted’s requirements for childminders on the Childcare Register say you must have it. A licence to hire out horses in England needs a valid certificate under the Animal Welfare (Licensing of Activities Involving Animals) (England) Regulations 2018.

Quotezone’s guide to what public liability insurance is explains when it is a licence condition.

Cover that contracts and councils ask for

Where the law is silent, contracts often fill the gap. A client or main contractor may ask to see a certificate before you start work. A commercial lease can set out which cover the tenant holds.

Read each contract for the limit of indemnity it names, and check your policy matches it. Councils can ask for proof too. GOV.UK says you need a public liability insurance certificate for a road occupation licence for building work in England and Wales.

Working from home and your home insurance

A standard home policy is written for a household, not a business. GOV.UK’s guide to running a business from home says home insurance may not cover your business, giving stock, computers and customers visiting as examples.

The same guide says you may need permission from your mortgage provider or landlord to run a business from home. Check your mortgage offer or tenancy agreement before clients start visiting.

Tell your home insurer that you work from home and ask what the policy leaves out. Then check your wording for business equipment, stock held at home and liability to visitors. For anything it excludes, you can compare a separate business policy.

What business insurance do you need for your situation?

The law sets the floor, and the way you work sets the rest. Start with the risks your own work creates.

Working alone from home

Professional indemnity is worth considering if clients rely on your designs, reports or recommendations. Check that your home policy or a business contents policy protects your equipment.

Cyber risk is another area to check. In the government’s Cyber security breaches survey 2025/2026, 43% of UK businesses reported a breach or attack in the previous 12 months.

The same survey found almost half of businesses (47%) had some form of cyber insurance, mostly within a wider policy. Check what your existing policies include before you compare cyber insurance.

Working at clients’ homes or on sites

Public liability is the cover clients and councils tend to ask for when you work on their property or the street. If you’re a tradesperson, tradesman insurance is the place to start.

Running a shop, office or premises

Check your lease to see whether you or the landlord insures the building. Then check your wording for contents, stock and business interruption. Public liability matters once customers visit. You can compare commercial property insurance or shop insurance.

Running a farm

Farms carry their own mix of employer, vehicle and public risks. Our guide to what farm insurance covers sets out which parts the law requires.

Fines and other consequences

Without employers’ liability insurance, you can be fined £2,500 for every day you are not properly insured, according to GOV.UK. Failing to display the certificate or show it to an inspector can mean a fine of £1,000. nibusinessinfo gives the same figures for Northern Ireland, enforced by HSENI.

For driving uninsured, GOV.UK’s driving without insurance page says the police could give you a £300 fixed penalty and 6 penalty points. If the case goes to court, you could get an unlimited fine or be disqualified. The police can also seize the vehicle.

Going without optional cover brings no fine. The catch is that your business pays any claim itself.

How much the cover costs

Premiums depend on your business and the cover you choose. For public liability, the ABI says premiums are usually based on the nature of your business, the number of people you employ and your claims history.

Tax adds to the price. HMRC’s Notice IPT1, updated 31 July 2026, sets the standard rate of Insurance Premium Tax at 12%. The 20% higher rate is for insurance sold with selected goods and services, such as cars and light vans.

Have your contracts to hand, because they name the limits you need. Comparing business insurance quotes from Quotezone’s panel of providers can give an indication of what yours might cost.

Quotezone has more than 20 years’ experience in insurance comparison, and the partner insurance companies on its business panel are regulated by the Financial Conduct Authority.

Telling your insurer everything

Give your insurer every relevant fact before the policy starts. The Insurance Act 2015, which applies across the UK, requires a fair presentation of the risk when you take out business cover.

If you did not make one, and the insurer would have refused the policy or offered different terms, section 8 lets it reduce or refuse a claim. If your insurer does not resolve a complaint, small businesses and micro-enterprises, as the FCA Handbook defines them, can go to the Financial Ombudsman.

You might also need

• Cyber insurance: for client data, online payments or systems your business cannot run without.
• Commercial property insurance: for the building, contents and stock at premises you own or must insure under a lease.
• Van insurance: a van you use for work needs the class of use your trade calls for.

Business insurance FAQs

What business insurance do you need as a sole trader?

Not by law, unless you employ someone outside your family, use a motor vehicle for work, or your regulator or licence requires cover. In Great Britain, the employers’ liability rules only start when you take on staff. Your clients, landlord or council may still make cover a condition of working with them, so read each contract.

Is public liability insurance a legal requirement?

Generally no. A few licensed activities in England require it, such as childminding on Ofsted’s Childcare Register and hiring out horses under the 2018 animal licensing regulations. In England and Wales, a road occupation licence for building work also needs a public liability certificate. Otherwise, it is usually a client, landlord or council that makes it a condition.

What business insurance do you need if you work from home?

The legal duties are the same as for any business: employers’ liability once you employ staff, and motor cover for any motor vehicle you use for work. GOV.UK warns that home insurance may not cover your business, including stock, computers and visiting customers. Tell your home insurer and check what it excludes.

Sources

1. legislation.gov.uk, “Employers’ Liability (Compulsory Insurance) Act 1969, section 1”, https://www.legislation.gov.uk/ukpga/1969/57/section/1. Accessed 13 October 2026.
2. legislation.gov.uk, “Employers’ Liability (Compulsory Insurance) Act 1969, section 2”, https://www.legislation.gov.uk/ukpga/1969/57/section/2. No outstanding effects. Accessed 13 October 2026.
3. legislation.gov.uk, “Road Traffic Act 1988, section 143”, https://www.legislation.gov.uk/ukpga/1988/52/section/143. Extent England, Wales and Scotland. Accessed 13 October 2026.
4. legislation.gov.uk, “Road Traffic (Northern Ireland) Order 1981, Article 90”, https://www.legislation.gov.uk/nisi/1981/154/article/90. Accessed 13 October 2026.
5. GOV.UK, “Vehicle insurance”, https://www.gov.uk/vehicle-insurance. Accessed 13 October 2026.
6. Department for Business and Trade, GOV.UK, “Business population estimates for the UK and regions 2025: statistical release”, https://www.gov.uk/government/statistics/business-population-estimates-2025/business-population-estimates-for-the-uk-and-regions-2025-statistical-release. Published 2 October 2025. Accessed 13 October 2026.
7. GOV.UK, “Employers’ liability insurance”, https://www.gov.uk/employers-liability-insurance. Accessed 13 October 2026.
8. nibusinessinfo.co.uk (Invest Northern Ireland), “Employers’ liability insurance”, Northern Ireland guidance, https://www.nibusinessinfo.co.uk/content/employers-liability-insurance. Accessed 13 October 2026.
9. GOV.UK, “Employment status: employee”, https://www.gov.uk/employment-status/employee. Accessed 13 October 2026.
10. Solicitors Regulation Authority, “SRA Indemnity Insurance Rules”, https://www.sra.org.uk/solicitors/standards-regulations/indemnity-insurance-rules/. Rule 2.1 and Annex 1 clause 2.1. Accessed 13 October 2026.
11. ICAEW, “Professional Indemnity Insurance (PII) Regulations”, https://www.icaew.com/regulation/professional-indemnity-insurance-pii-regulations. Updated 24 August 2026. Accessed 13 October 2026.
12. Financial Conduct Authority, FCA Handbook, “MIPRU 3.2 Professional indemnity insurance requirements”, https://handbook.fca.org.uk/handbook/mipru3/mipru3s2. Last updated 1 August 2021, in force. Accessed 13 October 2026.
13. Ofsted, GOV.UK, “Childminders on the compulsory Childcare Register: Ofsted requirements”, https://www.gov.uk/guidance/childminders-on-the-compulsory-childcare-register-ofsted-requirements. Accessed 13 October 2026.
14. legislation.gov.uk, “The Animal Welfare (Licensing of Activities Involving Animals) (England) Regulations 2018, Schedule 5”, https://www.legislation.gov.uk/uksi/2018/486/schedule/5. Accessed 13 October 2026.
15. GOV.UK, “Road occupation licence for building work (England and Wales)”, https://www.gov.uk/find-licences/road-occupation-licence-for-building-work. Accessed 13 October 2026.
16. GOV.UK, “Running a business from home”, https://www.gov.uk/run-business-from-home. Accessed 13 October 2026.
17. Department for Science, Innovation and Technology and Home Office, GOV.UK, “Cyber security breaches survey 2025/2026”, https://www.gov.uk/government/statistics/cyber-security-breaches-survey-20252026/cyber-security-breaches-survey-20252026. Published 30 April 2026. Accessed 13 October 2026.
18. GOV.UK, “Vehicle insurance: driving without insurance”, https://www.gov.uk/vehicle-insurance/driving-without-insurance. Accessed 13 October 2026.
19. Association of British Insurers, “Public liability insurance”, https://www.abi.org.uk/policy-and-guidance/general-insurance/business-insurance/liability-insurance/public-liability-insurance. Accessed 13 October 2026.
20. HMRC, GOV.UK, “Notice IPT1: Insurance Premium Tax”, https://www.gov.uk/government/publications/notice-ipt-1-insurance-premium-tax/notice-ipt1-insurance-premium-tax. Updated 31 July 2026. Accessed 13 October 2026.
21. legislation.gov.uk, “Insurance Act 2015, section 3”, https://www.legislation.gov.uk/ukpga/2015/4/section/3. Extent under section 23: England and Wales, Scotland and Northern Ireland. Accessed 13 October 2026.
22. legislation.gov.uk, “Insurance Act 2015, section 8”, https://www.legislation.gov.uk/ukpga/2015/4/section/8. Accessed 13 October 2026.
23. Financial Conduct Authority, FCA Handbook, “Glossary: small business”, https://handbook.fca.org.uk/glossary/G1095. Accessed 13 October 2026.
24. legislation.gov.uk, “The Employers’ Liability (Compulsory Insurance) (Amendment) Regulations 2004”, https://www.legislation.gov.uk/uksi/2004/2882/made. Inserts paragraph 15 into Schedule 2 of the 1998 Regulations; in force 28 February 2005. Accessed 13 October 2026.
25. legislation.gov.uk, “The Health Professions Order 2001, article 11A”, https://www.legislation.gov.uk/uksi/2002/254/article/11A. Accessed 13 October 2026.

This article is intended as generic information only and is not intended to apply to anybody’s specific circumstances, demands or needs. The views expressed are not intended to provide any financial service or to give any recommendation or advice. Products and services are only mentioned for illustrative rather than promotional purposes.