When you open a small business, you’re exposing yourself to several dozen (at least) types of risk. Fortunately, there’s a way of offsetting this risk: through insurance. But just as businesses are constituted differently so are the insurance products that they use to protect themselves. What works for one situation might not work quite so well in another. Nowadays, there’s an unprecedented range of highly specialized products available. If you’re opening a fast-food restaurant, for example, you might look into fast food insurance.

Insurance comes in several different types. For new small businesses, a few stand out as significant.

Public Liability Insurance

Why Every Small Business Requires Insurance?

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This kind of insurance is what will compensate you if you cause injury to a third party. If your business is found to be at fault, it will help you to pay compensation.

Employers’ Liability Insurance

EL is a legal requirement as soon as you become an employer. It must cover you for at least £5 million. If you don’t have it, you could receive a hefty fine of £2,500 per day.

Product Liability Insurance

If a customer is injured, or their property is damaged, or due to a defective product, you may be held accountable for the loss. This might even happen if you haven’t actually made the product – repair shops are vulnerable to claims of this kind and should be protected through product liability insurance.

Business Equipment Insurance

Your business might rely on a number of high-value items in order to operate. If these big pieces of equipment fail, then you might find yourself out of pocket not only for the cost of repairs and replacements but for the fall in trading you’ve endured as a result of the malfunction.

What Do I Need to Insure?

Why Every Small Business Requires Insurance?

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Since all businesses are different, the precise needs of yours might vary. In some cases, you might determine that the cost of a premium is not borne out by the risk you’re taking on – which in some cases might be negligible. Provided that you have at least some insurance covering the three key areas of vulnerability, you should be fine.

These key areas are:


You have a duty to provide care to the employees who work for you. Insurance can help to protect them against risk.


As we’ve mentioned, the equipment you use is vulnerable to damage and wear and tear. Getting caught out with a large bill for new equipment can present a serious cash-flow problem, which insurance helps to mitigate.


Your premises are also at risk of disaster, which again can be avoided through insurance. The two most significant of these are fire and theft, which should be covered by your Employer’s Liability Insurance.

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