Starting a new business is an exciting undertaking, filled with potential but also inherent risks. Without adequate insurance coverage, unexpected events could lead to financial losses or even business closure. Proper insurance is therefore essential to safeguard your business and protect both your assets and customers.
In today’s challenging environment, new businesses face significant modern threats. These include a rise in cybercrime and fraud, the imperative of ensuring employer safety and welfare, and the consistent threat of theft and property damage. Fortunately, insurance providers offer a range of tailored products designed to offer protection and assistance should unfortunate events occur. Here are the top three insurance products every new UK business should consider:
1. Cyber Insurance
Cyberattacks are a growing threat, and businesses in the UK and around the world have become primary targets for cyber criminals. In 2024, UK businesses experienced a staggering 7.78 million cyberattacks. The average annual cost of cybercrime has reached £1,120 per business victim. As a result, an estimated 22% of businesses have experienced a cybercrime incident in the last 12 months, with 50% identifying potential breaches or attacks.
The financial impacts are significant, but reputational damage can be even more devastating, as customer trust hinges on the secure handling of their data. This is where Cyber Insurance becomes an essential investment.
While policies vary between providers, most offer comprehensive protection against a wide range of cyber threats, including:
- Data breaches: Covering the costs associated with notifying affected individuals, credit monitoring services, and regulatory fines where they apply.
- Cyberattacks: This includes ransomware attacks, hacking attempts, malware infections, and phishing scams, with coverage for ransom payments, system restoration, and recovery support.
- Business interruption: Providing compensation for lost income if your systems go down due to a cyber event, as well as expenses incurred to keep operations running.
- Legal and forensic support: Access to expert teams to investigate a breach, provide advice on remediation strategies, and manage legal and regulatory responses.
- Third-party liability: Covering claims from customers, clients, or partners whose data may have been compromised.
- Reputation management: PR support to help protect or rebuild your brand after an incident occurs.
- Data asset restoration: Coverage for corrupted, deleted, or damaged digital assets.
Cyber Insurance also helps your business respond swiftly and confidently to the growing threat of digital attacks. For example, Tapoly’s Cyber Breach Response policy offers services letting potentially affected individuals know about data breaches, with 24-7 call center services and monitoring specialists on hand to assist those whose data may have been compromised.
2. Employer’s Liability Insurance
Ensuring the safety and wellbeing of employees is a crucial legal and ethical responsibility, but accidents in the workplace can still occur. The 2024 HSE (Health and Safety Executive) Health and Safety at Work statistics reported that 60,645 non-fatal injuries were reported by employees. Further, 1.7 million workers were suffering with work-related ill health. The total cost of workplace injury and illness amounted to a staggering £21.6 billion, representing lost productivity and costs relating to medical expenses and compensation. This impact underscores the core importance of Employer’s Liability Insurance.
Employer’s Liability Insurance provides vital protection if a current or former employee makes a claim against you for bodily injury or illness caused during their work. This insurance typically provides coverage for:
- Compensation payouts for work-related injuries or illnesses.
- Legal fees incurred while defending a claim.
- Medical costs and lost earnings for the employee.
- Claims that arise even years after employment has ended.
Employer’s Liability Insurance ensures your business is financially protected and demonstrates your duty of care as a responsible employer. It is compulsory and must be obtained as soon as you become an employer or have two or more directors. Your policy must cover at least £5 million. This applies if you hire staff, including part-time, temporary, or voluntary workers; use labour-only subcontractors; or operate as a limited company with multiple directors.
Failure to maintain adequate Employer’s Liability Insurance can result in significant fines, potentially up to £2,500 per day. It’s important to note, however, that Employer’s Liability Insurance ONLY covers claims made by employees. Public Liability insurance covers members of the public making claims against your company.
Although £5 million is the legal minimum coverage, most insurers offer standard coverage of £10 million. Many policies now include legal support and additional compensation coverage to ensure comprehensive protection. Thorough safety procedures, comprehensive training, and ongoing support are critical to an employee’s health and safety, but Employer’s Liability Insurance helps protect your business from the financial burden of claims and the potential reputational damage that could follow.
3. Commercial Property Insurance
Protecting your business’s physical assets is crucial, since damage, theft, and vandalism incidents against business premises are on the rise. Over 26% of business premises have fallen victim to crime, with theft being the most prevalent, followed by burglary and vandalism. Overall, this equates to businesses losing a total of £12.9 billion.
In addition to these threats, businesses also continually face risks from damage from fire, water, and other natural disasters. For example, storms have caused significant damage in the UK, with £146 million worth of damages claimed in the final quarter of 2024. These events can cause major disruptions, making Commercial Property Insurance a vital safety net to help businesses recover quickly and minimise operational downtime.
While policies vary by provider, Commercial Property Insurance generally covers:
- Buildings: The structural integrity of your premises, including fire, flood, storms, vandalism, and accidental damage. Coverage for contents, such as furniture, stock, machinery, tools, and business equipment.
- Office contents and equipment: This may be included or added as an extra, covering a broad range of items like electronics, signage, money stored on-site, and more.
- Business interruption (optional): Covering loss of income or relocation costs if your premises become unusable because of an insured event.
It is equally important to know what Commercial Property Insurance typically doesn’t cover:
- General wear and tear or gradual deterioration.
- Damage caused by poor maintenance or neglect.
- Losses due to incorrect valuations or insufficient insurance coverage.
- Damage caused by deliberate acts of the business owner or employees.
- Flood damage in high-risk areas, unless such coverage is explicitly included.
A major concern for UK businesses is underinsurance. Studies have shown that nearly 50% of commercial properties are underinsured, and 67% of claims are reduced or rejected because of it. Accurately estimating the value of your building, all contents, and equipment, and regularly reviewing this valuation is therefore essential. Speaking with a reputable insurance provider can help ensure your policy reflects your true level of risk and overall exposure.
Whether you are starting a new business or scaling an existing enterprise, choosing the right insurance policies is essential. Cyber Insurance, Employer’s Liability Insurance, and Commercial Property Insurance all form a strong foundation of protection against today’s most common and threatening business risks. These policies will help your new business stay resilient, remain compliant, and continue operations, no matter what challenges may arise.
About the Author
Janthana Kaenprakhamroy is the founder of Tapoly, an insurtech platform and the first on-demand insurance platform for the gig economy in Europe. Tapoly received the Innovator of the Year award at the UK FinTech Awards 2023, and was named Insurance Broker of the Year at the British Business Awards 2023 under her leadership. Janthana was featured in Forbes’ Top 100 Women Founders to Watch and also named one of the Top Ten Insurtech Influencers by the Chartered Insurance Institute and has been honoured as one of the Most Influential Women in Tech for three consecutive years by ComputerWeekly.com.
