What business insurance do I need as a sole trader in the UK?

Most sole traders need public liability insurance (required by most clients and venues — typically £1M–£5M cover). If you give professional advice or services, professional indemnity insurance is also essential. If you have employees, employers' liability insurance is a legal requirement. Specific industries (e.g. food, healthcare, finance) have additional regulatory requirements.

Is business insurance compulsory in the UK?

Employers' liability insurance is legally required if you have employees — minimum £5 million cover. Professional indemnity insurance is required by law or professional body rules for some regulated sectors (financial advisers, solicitors, architects, etc.). Public liability insurance is not legally required for most businesses but is often contractually required by clients or landlords.

How much does business insurance cost in the UK?

Public liability insurance typically costs £50–£200/year for a small sole trader (£1M cover). Professional indemnity varies widely by profession — a freelance consultant might pay £100–£300/year; a financial adviser pays significantly more. Combined policies (public liability + professional indemnity) for freelancers often start around £100–£150/year.

What is professional indemnity insurance?

Professional indemnity (PI) insurance covers you if a client claims your advice, design, or services caused them a financial loss. For example, if an accountant makes an error on a client's tax return that leads to a fine, PI covers the claim. It is essential for anyone providing professional services: consultants, designers, IT professionals, accountants, surveyors.

Do I need public liability insurance as a freelancer working from home?

If clients or members of the public visit your premises — even a home office — public liability insurance is advisable. If you work entirely remotely with no client contact, the risk is lower, but many contracts still require it. Check your client contracts carefully; many specify minimum insurance requirements.

Best Business Insurance UK 2026 — Small Business & Self-Employed Compared | PocketWise

Business insurance protects you from claims that could otherwise be financially devastating — a single lawsuit from a client or member of the public can cost tens of thousands of pounds. For sole traders and small businesses, the right insurance package depends on your industry, whether you have employees, and what your clients contractually require.

Types of Business Insurance — What Each Covers

Insurance type	What it covers	Legally required?
Public liability	Injury or property damage to third parties (clients, public)	No (but often contractually required)
Professional indemnity	Claims arising from your professional advice or services	Required in some regulated sectors
Employers’ liability	Employee injuries or illness arising from work	Yes — if you have employees (min £5M)
Product liability	Injury or damage caused by products you sell or make	No (but essential if selling physical products)
Business contents	Damage or theft of business equipment	No
Cyber insurance	Data breaches, ransomware, cyber attacks	No
Key person insurance	Loss of income if a key employee becomes unable to work	No

Provider Comparison — UK Business Insurance 2026

Provider	Best for	Public liability from	Professional indemnity from	Online quote
Simply Business	Freelancers, sole traders	~£50/year	~£80/year	Yes
Hiscox	Professional services, consultants	~£70/year	~£90/year	Yes
AXA Business	Wider coverage; growing businesses	~£60/year	~£100/year	Yes
Superscript	Tech, digital, startups	~£80/year	~£100/year	Yes
PolicyBee	Creative industries, consultants	~£60/year	~£90/year	Yes
QBE	Medium-sized businesses; complex needs	Varies	Varies	Via broker
Zurich	Large businesses	Varies	Varies	Via broker
Markel	Professional services; charities	~£75/year	~£95/year	Yes

Premiums are illustrative. Actual cost depends on turnover, industry, claims history, and coverage level.

What Cover Do You Need? — By Business Type

Freelancer / Consultant (sole trader, no employees)

Cover	Why	Typical cost
Public liability (£1M)	Client contracts; site visits	£50–£120/year
Professional indemnity (£500K)	Advice/services risk	£80–£200/year
Total		£130–£320/year

Tradesperson (sole trader, client premises)

Cover	Why	Typical cost
Public liability (£2M–£5M)	Physical work risk; client property	£100–£250/year
Tools cover	Equipment theft or damage	£80–£150/year
Total		£180–£400/year

Small limited company with employees

Cover	Why	Required
Employers’ liability (£5M+)	Legal requirement	Yes
Public liability (£2M+)	Client and public claims	Often contractual
Professional indemnity	Service liability	If professional services
Directors & Officers	Claims against company directors	Recommended

Worked Example — Freelance IT Consultant

Alex is a freelance IT consultant working with financial services clients. His contracts require £1M public liability and £1M professional indemnity.

Provider	PL £1M	PI £1M	Annual total
Simply Business	£72	£108	£180
Hiscox	£85	£130	£215
PolicyBee	£68	£105	£173

Best option for Alex: PolicyBee or Simply Business at around £170–£180/year for the combined cover his contracts require.

Key Things to Check Before Buying

Retroactive cover: Professional indemnity should cover work done before the policy starts (claims are often made months or years later)
Claims-made vs occurrence basis: PI policies are usually claims-made — if you cancel the policy and a claim arises later, you are not covered without run-off cover
Run-off cover: If you stop trading, buy run-off cover for professional indemnity claims that may still arise
Minimum coverage level: Check your client contracts — many specify minimum public liability (often £2M–£5M) and PI amounts
Exclusions: Some policies exclude specific activities — ensure your actual work is covered

Where to Buy Business Insurance

Directly from insurers: Hiscox and AXA have strong direct channels
Comparison platforms: Simply Business (comparison-focused), PolicyBee (specialist freelancer focus)
Through a broker: Best for complex or high-value needs — brokers can access the whole market

For more on running a business see self-employment guide, business expenses you can claim, and best accounting software UK.

Best Business Insurance UK 2026 — Small Business & Self-Employed Compared

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