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Whether you're insuring a new or an established business, understanding market costs is important to avoid overpaying. In this article, we'll explain how costs vary across different types of business insurance and different types of businesses. Armed with this information, you can buy the cover you need and move onto more important items on your to-do list.
- How much is business insurance?
- What factors influence the cost of business insurance?
- How does your industry affect business insurance costs?
Prices vary a lot from one business to the next, so when you're ready to find out how much you'll need to pay click here. You'll be taken to a short form to fill in some information about you and your business, then the search engine powered by our partner QuoteZone will connect you with insurance providers to get your quotes. Other than professional indemnity insurance for some harder-to-insure businesses (e.g. architects and builders in the wake of the Grenfell tragedy), business insurance is typically a manageable cost of doing business. Especially when you consider the potential cost of a disaster.
Average Cost of Business Insurance
The average cost of business insurance in the UK is £118 a year (ranging from £50 up to £500 or more for small businesses), just for public liability cover. However, most small businesses in the UK will spend more than this on business insurance to cover additional types of risk. For example, the cost of employers' liability insurance (required by law if you hire any employees) is another £60 - £210 per employee depending on how physically risky their job is (e.g., an office worker is cheaper to cover than a labourer).
The specific risks faced by a company determine what types of coverage it really needs, and how much this protection will ultimately cost. We gathered hundreds of sample small business insurance quotes to find estimates for the cost of business insurance. Here's what we found:
|Average Small Business Insurance Costs||Low End||High End|
|All Business Insurance||£50||£1,000s||Get Quotes|
|Professional Indemnity||£85||£1,000+||Get Quotes|
|Public Liability||£50||£450+||Get Quotes|
|Employers' Liability (per employee)||£60||£200+||Get Quotes|
|Personal Accident (per person)||£65|
Each business presents its own set of risks and a unique profile, making insurance premiums highly variable. Use these figures as a guide only—you may receive quotes that are significantly higher or lower. Whatever the cost of your business insurance, remember that having the right protection in place can help avert financial disaster—and disaster does strike. In fact, the ABI reported that insurers pay out £22 million a day in business insurance claims in the UK.
If you're unfamiliar with any of these types of business insurance and would like to learn more, click on the blue links below and throughout the article.
Public liability insurance
Costs from £50 to £500 a year
Employer's liability insurance
Costs from £60 per person
Professional indemnity insurance
Highly variable, from £85 to £1,000s
Commercial vehicle cover
Typically costs £2,000 or more per vehicle
Legal expenses cover
Costs start around £72 per year
You can also see a comprehensive set of business insurance guides here.
Public Liability Insurance Costs: from £50 to £500 or more
The cost of public liability insurance ranges from £50 to £500 for a small business, and depends on factors like the industry, turnover, business structure, number of directors, location and amount of cover. For example, a self-employed personal trainer would pay around £50 for public liability while for a limited construction company with 2 directors the cost would be closer to £450; riskier lines of work will cost even more.
Any small business that interacts with the public can use public liability insurance to protect against accidental damage or injury claims from third parties.
Employers' Liability Insurance Costs: £61 to £200 or more per employee
The cost of employers' liability insurance ranges from around £60 for an office worker up to around £213 or more for a typical worker, and depends primarily on the number of employees and what type of work they do. Employers' liability insurance can cost over £1,000 per employee for particularly dangerous professions like scaffolding.
Employers' liability policies can be underwritten on a wageroll or 'per capita' basis, where the premium is calculated either by the number of employees or the overall wageroll being paid out. A wageroll underwritten policy is subject to a set premium for the 'wageroll bracket' they fall into. Typically these allow a lot of flex (i.e. wageroll brackets are from £0-100k, £100-250k, £250-500k and so on).
If you hire anyone, even a part-time or temporary worker, you are required by law to hold employers' liability insurance. Employers' liability insurance covers legal defence costs and compensation payments due to claims from employees who are injured or fall ill as a result of their work.
Professional Indemnity Insurance Costs: £85 to £1,000 or more
The cost of professional indemnity insurance starts from around £85 a year for low-risk professions such as a photographer, but a small finance or accounting business could easily pay over £1,000 a year for PI cover. Mid-size architecture and construction firms could pay £50k a year or more (prices have risen tremendously for these professions in the past few years). Prices are highly variable for PI cover.
Professional indemnity insurance covers legal defence costs and compensatory damages if a client claims they've suffered a financial loss due to negligent professional advice or service.
Commercial Vehicle Insurance Costs: £2,000 or more
The cost of a commercial vehicle insurance policy will depend on factors like the value of the vehicle and the level of cover you choose. But it will certainly cost more than a regular car insurance policy—even one covered for "business use".
For example, we recently quoted coverage for a popular small car with business use (e.g., driving between multiple work locations) and compared that to coverage for commercial travelling (e.g., delivering goods or services) and found that commercial cover cost 2.75X as much as coverage for business use—in real money terms, it cost an extra £1,400 for the sample car and driver to get commercial travelling cover.
Legal Costs Insurance Costs: £72 or more
Business legal expenses insurance costs from around £72 a year. Business legal costs insurance and covers legal expenses for situations not covered by other business liability insurance such as employment disputes, HMRC tax enquiries and disputes, HSE investigations, contract disputes, debt recovery, and more.
Cost of Goods in Transit Insurance Costs: £200 or more
The cost of goods in transit insurance starts from as little as £200 a year, but depends on type of goods you transport, your annual mileage and the geographies in which you operate, among other things.
Cyber Insurance Costs: £132 or more
The cost of cyber insurance starts from around £132 a year (£11 a month) but many business pay closer to £240 a year; and large companies can pay many multiples of this. The cost can depend on factors like the type of data you store and the types of systems you use—essentially, costs depend on the types of cyber risks a business presents to an insurer.
Cyber insurance provides financial protection against cyber crimes and data breaches, and provides expert assistance with managing an incident.
Business Interruption Insurance Costs: depends on turnover
While business interruption insurance costs can start from as little as £82 a year for a small business, the costs of this type of insurance can be highly variable as the premium will be directly related to a company's turnover. And in light of the Supreme Court's ruling on the Financial Conduct Authority's test case leading to business interruption insurance payouts related to Covid-19, prices of this cover may rise in the future as insurers work to reclaim loses (plus, new or renewed policies are likely to specifically exclude cover for pandemics).
Business interruption insurance primarily covers loss of income due to a physical peril such as fire or flood.
D&O Insurance Costs: under £500 or more
While D&O insurance costs start from under £500 a year, the premium will depend on the company size, industry, claims history, company profits and debts, the professional background of the officers and directors, and M&A history.
D&O insurance covers losses if an individual director or officer is held personally responsible for an actual or alleged wrongdoing in their role.
Personal Accident Insurance Costs: £65 or more per person
The cost of personal accident insurance is in the range of £65 - £80 per person, but depends primarily on the number of people being covered and the riskiness of the work they do.
Personal accident insurance can provide a financial benefit (e.g., a weekly payment or a lump sum amount) if someone has an accident (usually workplace related) that results in a serious injury or death. The payout is meant to protect against lost wages, pay for household bills, etc.
What factors influence the cost of business insurance?
The cost of business insurance depends on the type of cover you're buying and the risk factors presented by your company to the insurer. For each type of business insurance, and insurer will consider the risks for which you're seeking coverage (e.g., liability, damage, injury, wrongdoing, etc.) and the profile of your business. Here are some of the factors that can affect your business premium:
- Company size: Insurers use the size of your company to determine risks, looking both at your turnover or largest contract size (especially important for professional liability insurance) and number of employees.
- Industry / profession: Each line of work presents its own set of risks. For example, since construction is inherently dangerous, a building company will face higher premiums for public liability and employers' liability insurance than many other types of businesses.
- Claims history: A business with a history of claims can raise a red flag for potential insurers (e.g., a sign the business is not careful enough or doesn't properly train employees).
- Company turnover and debts: Higher turnover can result in more expensive lawsuits against a company, and therefore more risk to an insurer. Not sure what counts as turnover? Here's a definition.
- Professional background of officers and directors: Given the decision-making and managerial roles of officers and directors, insurers might look into the professional background of key people in a company. A lack of relevant experience can result in higher insurance premiums.
- M&A history: Companies that have undergone a recent corporate change like an acquisition can present a higher risk, as the acquired company could bring baggage with it.
- Amount of coverage: Higher cover limits nearly always cost more.
- Number of employees: Employers' liability insurance is priced based on the number of employees in most cases (not in all cases though—for instance a restaurant employers' liability insurance costs typically reflect a certain minimum number of employees, and an insurer many not even enquire about staff levels).
How your industry affects business insurance costs
As business insurance costs reflect the risk to an insurer, the industry you're in can have a significant effect on your business insurance rates. For example, public liability insurance for a sole trading DJ or tutor costs from around £50 a year while a builder could easily pay 10X as much. Here is a snapshot of estimates for public liability insurance for different types of work.
|Average Cost of £2m Public Liability Insurance||Average premium across different business structures|
To arrive at average costs of business insurance, we gathered dozens of sample quotes across a range of lines of work, business structures and sizes. The figures here are meant to give you a rough idea of prices, but quotes can be highly variable depending on the many factors of your application. As a result, you may need to pay more, or less.