Business
TL;DR
Employers liability insurance is legally required for almost all UK businesses with employees. Public liability and professional indemnity are not legally mandatory for most businesses but are widely required by clients and contracts. Compare like-for-like coverage levels, not just premiums. FCA-authorised brokers and direct insurers can both provide regulated business insurance products.
Business insurance in the UK covers a wide range of risks, from claims by employees injured at work through to professional negligence claims, property damage, and cyber incidents. The right combination of policies depends on your business type, size, sector, and contractual obligations. Some policies are legally compulsory; others are commercially essential even without a legal requirement.
The UK business insurance market is regulated by the FCA and the Prudential Regulation Authority (PRA). All insurers and brokers must be FCA-authorised. You can verify authorisation at the FCA Register at register.fca.org.uk. This guide covers the main types of business insurance, which are legally required, how to compare quotes, and what to watch for in policy exclusions.
Key facts (2026)
- Employers Liability (EL) insurance is legally compulsory for almost all UK businesses that employ staff, including part-time and temporary workers. Minimum cover is £5 million (Employers Liability (Compulsory Insurance) Act 1969).
- Failure to hold EL insurance when required can result in a fine of up to £2,500 per day of non-compliance (Health and Safety Executive).
- Public liability insurance is not legally required for most businesses but is required by many client contracts, local authority licences, and trade body memberships.
- Professional indemnity (PI) insurance is a legal requirement for certain regulated professions including solicitors, accountants, financial advisers, and architects.
- All business insurance policies sold in the UK must be provided by FCA-authorised insurers or Lloyd's of London syndicates regulated by the FCA and PRA (FCA).
Employers liability insurance: the legal requirement
The Employers Liability (Compulsory Insurance) Act 1969 requires almost all UK businesses that have one or more employees to hold EL insurance with a minimum indemnity limit of £5 million. The policy must be from an authorised insurer. In practice, most EL policies provide cover of £10 million or more. EL covers claims made by employees who are injured or become ill as a result of their work. The certificate of EL insurance must be displayed at each place of business or made available electronically to employees. Certain businesses are exempt, including sole traders with no employees, family businesses where all employees are close family members, and some public bodies.
Public liability insurance
Public liability (PL) insurance covers claims made against your business by third parties - members of the public, customers, or other businesses - for injury or property damage caused by your business activities. It is not a legal requirement for most sectors but is practically essential for any business with customer-facing activities, business premises, or work on client sites. Cover levels typically range from £1 million to £10 million per claim. Many client contracts, council licences for market stalls and events, and trade body memberships specify a minimum PL cover level - often £2 million or £5 million. Check your contractual obligations before selecting a cover amount.
Professional indemnity insurance
Professional indemnity (PI) insurance covers claims arising from professional errors, omissions, or negligent advice that cause financial loss to a client. It is legally required for regulated professions including solicitors (Solicitors Regulation Authority), accountants (ICAEW or ACCA), financial advisers (FCA), architects (ARB), and surveyors (RICS). For unregulated professions, PI is increasingly required by client contracts, particularly in technology, consulting, and marketing. PI policies are typically claims-made, meaning the policy in force at the time the claim is made covers the incident, not the policy in force when the work was done. This means you need to maintain cover even after leaving a profession and may need run-off cover.
Other key business insurance types
Beyond EL, PL, and PI, businesses may need: Business interruption (BI) insurance, which covers loss of income if your business cannot trade due to an insured event such as a fire or flood; commercial property insurance covering buildings and contents; cyber insurance covering data breaches, ransomware attacks, and regulatory fines under UK GDPR; directors and officers (D&O) liability covering legal claims against company directors; and product liability covering injury or damage caused by a product you manufacture or supply. A business owner's package (BOP) policy bundles several of these coverages into a single policy, which is often more cost-effective for smaller businesses than purchasing each separately.
How to compare business insurance quotes
When comparing business insurance quotes, check these factors beyond the headline premium: the indemnity limit (the maximum the insurer will pay per claim or per year); the excess (the amount you pay per claim before the insurer contributes); policy exclusions (activities or circumstances not covered); whether the policy is occurrence-based or claims-made for PI; and the insurer's claims handling record. Price comparison sites typically cover SME business insurance packages. For more complex or specialist risks, an FCA-authorised commercial insurance broker can access a wider range of insurers including Lloyd's syndicates and can advise on appropriate cover levels for your specific sector and risk profile.
Related guides
- Best business energy UK 2026
- Best business software UK 2026
- Best business bank accounts UK 2026
- All Business guides →
Frequently asked questions
Do I need employers liability insurance if I am a sole trader with no employees?
No. EL insurance is only required if you have employees. Sole traders with no employees are exempt. However, if you engage subcontractors who work exclusively for you, HMRC and the courts may treat them as employees for legal purposes; seek professional advice if your situation is borderline.
What is the minimum cover required for employers liability insurance?
The legal minimum under the Employers Liability (Compulsory Insurance) Act 1969 is £5 million per claim. Most policies provide at least £10 million. Failure to maintain required EL insurance can result in fines of up to £2,500 per day. The HSE enforces EL insurance compliance and can inspect your certificate.
How do I check if a business insurer is FCA-authorised?
Use the FCA Financial Services Register at register.fca.org.uk and search by firm name or FRN number. Authorised firms have a status of Authorised or Registered and show the regulated activities they are permitted to carry out. Do not purchase insurance from any firm not appearing on the register.
What is run-off cover for professional indemnity insurance?
Run-off cover extends PI protection for claims arising from work done during an earlier period after you have stopped trading or left a profession. Because PI policies are claims-made, if a client makes a claim after your active policy has lapsed you could be personally liable without run-off cover. Many professional bodies require members to hold run-off cover for a minimum period after ceasing practice.
Does business insurance cover cyber attacks?
Standard business insurance policies typically do not include cyber cover. A separate cyber insurance policy is needed for coverage of data breaches, ransomware, business interruption from cyber events, and regulatory fines under UK GDPR. Cyber insurance has become increasingly important for businesses of all sizes following a significant increase in ransomware and phishing attacks targeting SMEs.
How we verified this guide
All legal requirements and cover descriptions were verified against the Employers Liability (Compulsory Insurance) Act 1969, HSE guidance, FCA regulated activities guidance, and ABI business insurance resources during May 2026. We do not accept payment from insurers or brokers and do not earn commission on insurance sales.
Primary sources
- Employers Liability (Compulsory Insurance) Act 1969
- HSE - Employers liability insurance guide
- FCA Financial Services Register
- ABI - Business insurance guidance
Last reviewed: May 2026.