Even a small business can pay hundreds of pounds a year in business insurance depending on the coverage it needs. Here's a breakdown of starting insurance costs for different types of business insurance, from public liability to employers' liability, as well as a comparison of the cost of cover for different industries.
- How much is business insurance?
- What factors influence the cost of business insurance?
- How does your industry affect business insurance costs?
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Average Cost of Business Insurance
A typical small business in the UK will spend at least a few hundred pounds a year on business insurance, but costs will depend on the specific risks faced by a company and what types of coverage it needs.
For example, public liability insurance for an SME typically costs around £118 a year (but can range from £50 up to £500 or more!), employers' liability insurance costs another £60 - £210 per employee and cyber insurance starts from around £132 a year.
We've gathered hundreds of sample small business quotes to find estimates for the cost of business insurance. Each business has its own set of risks and a unique profile, making insurance premiums highly variable in some cases. Use these figures as a guide only—you may receive quotes that are significantly higher or lower.
Public Liability Insurance Costs: from £50 to £450 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 insurance while a limited construction company with 2 directors would pay closer to £450; riskier lines of work will cost even more.
Any small business that interacts with the public needs public liability insurance to protect against 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.
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.
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.
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.
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 provides 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
- Industry / profession
- Claims history
- Company turnover and debts
- Professional background of officers and directors
- M&A history
- Amount of coverage
- Risks being covered
- Number of employees
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 cost from just £54 while a builder will pay 10X as much. Here is a snapshot of estimates for public liability insurance for different types of businesses, and links to our studies on individual lines of work.