Start up insurance

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What is start up business insurance?

Start up insurance provides cover against unforeseen events for your new business. It protects you against potential risks such as liability claims, business interruptions and health issues.

You can often tailor the cover to include the business insurance policies you might need for your line of work. That includes public liability, employers' liability, professional indemnity, income protection, tools, content and cyber insurance.

Do I need insurance for my start up?

Business insurance should be at the top of your list when you start your new business. There are plenty of things that can happen that could land you with large bills or the inability to carry out your work.

Different business insurance policies can provide cover for different events, it depends on what your business does. Employers' liability insurance is the only policy that's a legal requirement, and that's only if you employ anyone.

You may find some clients won't do business with you if you don't have certain types of insurance. Some trade unions also won't let you register your business without business insurance too.

What insurance is legally required for a start up?

Employers' liability insurance is a legal requirement if you hire employees. The only exception is if you hire close family, such as a spouse, parent, son or daughter.

You must get employers’ liability insurance as soon as you become an employer. In addition, the policy must cover you for at least £5 million. Failure to do so can land you a £2,500 fine for each day you're not insured.

You must also display your insurance certificate. If you don't, that too can incur a fine of £1,000.

When should I get business insurance for my start up?

When starting a business - there's a lot on your mind. You're pulled in every direction and it's difficult to find the time and space needed for things like business insurance.

It doesn't make it any less important, even if it feels like one of the less exciting decisions to make in the early days of your business.

It's important you take out any relevant policies as soon as possible. If you need to make a claim, the policy needs to already be in place. And a claim can arise at any time.

You may also find some clients simply won't work with you if you don't have certain insurance policies in place. So that should be a reason to get things in place sooner rather than later.

A simple way to think about business insurance, and the type of policies you might need, is to ask yourself a few questions.

  • Do I work with the public?

  • Do I need any equipment, tech or machinery to carry out my work?

  • Do I provide services which clients depend on?

How can we help?

Finding spare time when you're just starting out is tough. Whether you're sorting out finances, troubleshooting, managing clients or securing future work - there's little opportunity to think about business insurance.

Our partner Simply Business can make the process simple and help with some of the legwork. You just share some information about your business and you can select the right policies to suit your line of work.

What does start up business insurance cover?

Start up insurance is a term used to cover a range of different policies. Each individual policy covers your business for different events. here are some of the common policies that are often included:

Public liability insurance

This helps protect your business against claims that might be made by the general public. It might be for injuries, illness, or damage to property caused by your business. It isn’t required legally, but it can help cover the cost of legal fees, compensation and medical expenses. Costs such as these can soon add up, so it’s worthwhile having insurance in place.

Employers' liability insurance

This helps protect your business against claims from your employees. It’s a legal requirement for businesses with employees, and if you don’t have it you could face a big fine. It covers your business for any injuries your employees suffer while at work. It helps cover compensation payments, medical expenses and any legal fees.

Professional indemnity insurance

This helps protect your business against claims from clients of misconduct or negligence. Examples of this could be poor advice given by your business causing financial harm, or work not completed as promised. Clients could claim for reputational harm your work has caused them too. While not a legal requirement, some trade bodies and regulators might insist you have it in place in order to register with them.

What our business insurance expert says

Start up insurance can be an essential tool to help limit risks for your business from the outset. Providing a range of policies to cover your business from unforeseen liabilities, damages and legal issues.

Discover cheap start up insurance quotes

Which jobs does start up business insurance cover?

Whatever your new business is, start up insurance can be tailored to suit you.

If you work alone or with employees, from home or in a warehouse, there are potential risks all around. And it's not just the large bills you could have to pay if you aren't covered. You might not be able to carry out your work either.

That's why start up insurance is so important. Some 20% of new businesses fail in the first year. Business insurance could help cover unexpected events that might otherwise tip your business over the edge.

Here are some examples of a few occupations that could benefit from start up insurance:

Content creators and other creative occupations may need protection against claims of copyright infringement. And equipment might likely need protecting from potential theft or damage.

Accountants may need cover for professional liability if their advice or work leads to a financial loss for their client.

Plumbers might need cover for a range of unexpected events: it might be accidental damage to property, injury or claims of faulty work.

Copywriters may need protection against claims of plagiarism.

How much does start up business insurance cost?

A range of considerations influence how much you can pay for start up insurance. The type of policies you select can be a significant influence.

There are different policies available, each covering different events. There's tools and contents insurance or professional indemnity and cyber insurance. And each policy has different levels of cover that can affect the overall price.

Some factors that can affect the price include:

Size of your business, the more people you employ, the higher the risk of a potential accident

Your business type, some are more likely to cause harm or damage to the public or their property. Other businesses are more susceptible to things like cyber crime, while some might cause reputational issues for a client due to the nature of their work

The amount you interact with the public, dealing with customers every day puts you at a higher risk than a business that isn't public-facing.

The amount of cover you take, the more cover you have, the more you pay.

How much should I be covered for?

It's important you tell the insurer as much as you can about your business when applying for start up business insurance quotes.

Insurance applications are designed to ensure you get the cover you need, in line with the risks your business faces. By accurately representing your business and its activities you can ensure you get the appropriate level of cover.

Explain honestly what your business' activities are and potential risks you might need adequate cover for during the application.

Our partner Simply Business

The quotes you'll get from us are provided by Simply Business, one of the UK’s best known business insurance providers.

They’ve helped more than 3 million businesses since 2005 find the right cover at the right price. This includes everyone from sole traders to large, multi-site operations. 

They’re regulated and authorised by the Financial Conduct Authority, too. This means  that everything they do is out in the open. Just like every other partner we work with, you can rest assured you’re in safe hands with Simply Business.

Get a quote today and find the cover you need in minutes.


How insurance policies work

Start up insurance can be made up with a selection of different policies. Each one can provide cover and protection for unexpected events. Usually the main policies to consider if you're starting out are employers' liability, professional indemnity and public liability.

Here are some examples of how these three main policies could work in real life:

A start up plumber hires an assistant to help out on occasional big jobs. During a call out, the assistant suffers a hand injury due to a defective tool. They need medical attention and time off to recover. The plumber's employers' liability insurance covers the cost of the medical bills and compensation. Without it, the plumber would've had to pay for it out of their own pocket.

A new private tutor offers lessons at their home. During a lesson, a student trips on a rug and injures their ankle. The student's parents file a claim against the private tutor for medical expenses and compensation. Using their public liability insurance, the costs including legal fees are covered. Without it, the private tutor would've faced significant bills.

A start up accountant has been asked to prepare financial statements for a client. Due to an error in the accountant's calculations, the client incurs penalties from HMRC. As a result, the client files a claim against the accountant for damages. Using their professional indemnity insurance, both the legal fees and compensation are covered. Without it, the accountant would've taken a big financial hit.


Will changing from a sole trader to a limited company impact my policy?

It's likely that any existing insurance policies would be impacted if you make this change. The first thing to do if you're considering this is to contact your insurance provider and explain your plans.

You may find certain policy adjustments need to be made to reflect the change in legal structure. The policies might need to be moved into the name of the limited company too.

You may find the cost changes too, as insurers may assess the risk between a sole trader and a limited company differently. It's likely your cover needs could change too.

Is being a sole trader and self-employed the same thing?

While they are often referred to as the same thing, there are differences.

A sole trader is a specific type of self-employment. As the title suggests, it means an individual owns and runs their business on their own. They take full responsibility for its finances and day to day activities. They may have registered their business with the government under their own name.

A self-employed individual might not operate as a sole trader. They may choose to work in a partnership or a limited company. But in any case, they aren't employed by anyone and are responsible for their own taxes.

Can you insure an unregistered business?

Yes, you should be fine to insure your unregistered business.

It's best to check with your chosen insurer to avoid any issues.

Page last reviewed: 12/06/2024

Reviewed by: Alex Ryde Business Insurance is provided by Simply Business. Simply Business is a trading name of Xbridge Limited which is authorised and regulated by the Financial Conduct Authority (Financial Services Registration No: 313348). Xbridge Limited (No: 3967717) has its registered office at 6th Floor, 99 Gresham Street, London EC2V 7NG. Our service is free and compares a range of trusted household names. is an intermediary and receives commission from Xbridge Limited which is based on a percentage of the total annual premium if you decide to buy through our website. We pride ourselves on impartiality and independence – therefore we don't promote any one insurance provider over another.