What Business Insurance Do I Need? (UK)

For most UK businesses, only one insurance is required by law: employers' liability, and only once you employ someone (minimum £5m cover). If you use a vehicle for work, motor insurance is the other legal must. Everything else people call “essential” — public liability, professional indemnity — is not required by statute. It becomes near-unavoidable because your contracts, clients, landlords, licences or regulator demand it, which is a different thing from the law demanding it. This page routes you to whichever actually applies to your situation.

Employ staff?Yes — by law*

Employers' liability

Contracts / premises?Usually

Public liability (contract-driven)

Advisory / regulated?Often

Professional indemnity

*Employers' liability is required by law under the Employers' Liability (Compulsory Insurance) Act 1969. A narrow exemption exists for unincorporated businesses employing solely close family; it does not apply to limited companies.

Start here: is any of it actually the law?

It's worth being clear, because the industry blurs it. In the UK the law only compels business insurance in a couple of specific situations — chiefly the moment you take on an employee, and if you drive for work. There is no law that says a business, in general, must be insured. So the honest answer to “what do I need?” is: a small legally-required core, plus whatever your particular work and clients require on top. The three routes below cover the policies that matter for most businesses.

1. You employ staff → employers' liability (this one is the law)

As soon as you employ anyone — full-time, part-time, temporary or an apprentice — you must hold employers' liability insurance. Under the Employers' Liability (Compulsory Insurance) Act 1969 the statutory minimum is £5m of cover from an authorised insurer, and trading without it risks a fine of up to £2,500 for each day you're uninsured. The only exemption is narrow: unincorporated businesses (sole traders and partnerships) that employ only close family members — it does not apply to limited companies, so a limited company must hold cover even if its sole employee is a spouse.

2. Contracts or public premises → public liability

Public liability covers claims from third parties — a client, visitor or member of the public — for injury or property damage connected to your work. It is not required by law. What makes it near-essential is that most commercial clients, main contractors, property managers, trade platforms and some local-authority licences won't let you work without proof of cover, commonly at £1m, £2m or £5m depending on the site. If you enter clients' homes or premises, work on-site, or deal with the public, treat it as a baseline — but recognise the requirement is coming from your contract, not from statute.

Read more: What is public liability insurance? — see it applied to specific trades for plumbers, electricians and cleaners — or check your business in the tool below.

3. Advisory or regulated work → professional indemnity

Professional indemnity covers claims that your advice, designs, specifications or professional work caused a client financial loss — the exposure that consultants, designers, accountants, IT contractors and other advisory businesses carry. For most businesses it isn't required by general law, but some regulators make it mandatory for their professions and set their own minimum levels of cover, and plenty of consultancy and agency contracts require it too. Because the required level is set by your regulator or your contract rather than one national figure, we don't state a single minimum here: ⚠ check the specific requirement that applies to your profession with your regulator (for example the SRA, ICAEW, ARB or FCA) or read it from the contract you're being asked to sign.

You set up as a limited company and bring on one part-time apprentice. From day one you're legally required to hold employers' liability insurance at £5m — that's not optional. You also fit work in clients' homes, so every contract you sign asks for £2m public liability: not the law, but no cover means no job. You give occasional paid advice on system design, so a client contract also asks for professional indemnity. Three very different reasons — one statutory, two contractual — and only the checker-style, situation-by-situation approach tells them apart.

See exactly what applies to your business

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Frequently asked questions

What business insurance is a legal requirement in the UK?

Only two are required by law for most businesses: employers' liability insurance the moment you employ anyone (minimum £5m cover, under the Employers' Liability (Compulsory Insurance) Act 1969), and motor insurance if you use a vehicle for work. Everything else — public liability, professional indemnity, and so on — is not required by law, though it's often required by the people you work for.

Do I need any insurance if I'm a sole trader with no employees?

By law, generally no — with no staff and no work vehicle, no policy is legally mandated. But you remain personally liable for any third-party injury or damage you cause, so public liability cover is widely advised, and many clients and platforms won't engage you without it.

Is public liability insurance ever required by law?

No. There's no general UK law requiring public liability insurance. When you're told you must have it — usually at £1m, £2m or £5m — that requirement comes from a client contract, a commercial landlord, a trade platform or a local-authority licence, not from statute.

When do I need professional indemnity insurance?

Professional indemnity covers claims that your advice, designs or professional work caused a client financial loss. It's typically driven by your profession: some regulators (for example for solicitors, accountants, architects and financial advisers) make it mandatory and set their own minimum levels, and many consultancy or agency contracts require it. Because required levels vary by regulator and contract, check the figure that applies to your specific profession rather than assuming a single number.

How do I know which policies actually apply to my business?

Start with the two legal triggers — do you employ anyone, and do you use a vehicle for work? Then layer on what your contracts and sector expect (public liability for on-site or public-facing work, professional indemnity for advisory or regulated work). Our free checker walks you through this in under a minute.

Related guides

The requirement to hold employers' liability insurance, the £5m statutory minimum and the up-to-£2,500-a-day penalty come from the Employers' Liability (Compulsory Insurance) Act 1969 — see the HSE guidance on employers' liability insurance and GOV.UK, “Employers' liability insurance”. The close-family exemption applies only to unincorporated businesses and not to limited companies, per the same guidance. Public liability insurance is not mandated by UK law; where it's required, that requirement comes from client contracts, landlords, platforms or licences. Professional indemnity is not required by general law either — where it's compulsory the minimum level is set by the relevant regulator (for example the SRA, ICAEW, ARB or FCA), so confirm the figure that applies to your profession with that authority rather than assuming a single national minimum.