# Business insurance: what a UK micro-business actually needs

*Source: https://credicorp.co.uk/business-insurance-what-a-uk-micro-business-actually-needs/*

UK business insurance is a market crowded with broker calls and over-selling. The summary below is what we wish every customer knew before they signed an annual policy.

## What is legally required

**Employers’ liability insurance** is the only mandatory business insurance in the UK, and only when you employ anyone other than the sole director. Minimum cover £5 million; most policies default to £10 million because the premium difference is tiny. Fines for trading without it are £2,500 per day. If you employ a single person, you need it from day one.

## What is functionally required

**Public liability insurance** is not legally required but you cannot operate without it. Most landlords, customers and venue operators require £1 million or £2 million as a condition of access. The standard product is cheap (~£100-£300 a year for a micro-business) and covers third-party injury and property damage you cause.

**Professional indemnity insurance** covers losses caused to a client by bad advice or a mistake in your work. Required for solicitors, accountants, architects, consultants, IT contractors and similar — often a contractual condition. Premiums scale with claim limits and fee income.

## Genuinely useful for many micro-businesses

- **Cyber liability** — covers data breach response, ransomware costs, customer notification under UK GDPR. For any business that holds customer data, this is now more important than physical contents cover. Premium: £200-£600 for typical micro-business.

- **Tools and equipment cover** — for trades. Replaces stolen / damaged tools, often including in-van overnight.

- **Goods in transit** — for anyone moving stock or product.

- **Business contents** — for office-based businesses with expensive kit.

- **Business interruption** — pays out if you cannot trade because of a covered event (fire, flood, sometimes cyber). Often bundled with property cover.

## Often over-sold

- **Key person insurance** — useful for businesses with one critical person whose absence stops the company earning, but oversold to founders whose company would continue without them.

- **Directors and officers (D&O) insurance** — relevant when there are external shareholders or you sit on regulated boards; usually unnecessary for a sole-director micro-business.

- **Legal expenses cover** — sometimes useful, but many cover-only-after-the-event so you cannot use them to fund a fresh dispute.

## How to buy

Use an FCA-authorised broker, not a comparison site. A broker has access to underwriters that comparison sites do not, can interpret exclusions properly and writes a single policy document that actually matches your work. The British Insurance Brokers’ Association (BIBA) has a free “Find a broker” service.

## What to check on every policy

- **Excess** — what you pay on every claim.

- **Aggregate limit** — total annual payout cap.

- **Exclusions** — read these properly; “cyber excluded” on a property policy after a ransomware attack is a real example.

- **Notification clause** — most policies have a strict reporting window; missing it voids cover.

Get covered before you need to claim. Most micro-businesses spend £400-£900 a year for a sensible bundle of public liability + employers’ liability + cyber, which is less than a single afternoon’s billing.

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Credicorp Limited — UK lender to limited companies (Company No. 16093826). credicorp.co.uk