Insurance basics for London business owners

Let's be honest – insurance probably isn't the first thing you think about when starting a business. It's not exciting, it's not creative and it doesn't feel urgent… until something goes wrong.

A smashed window, a customer injury, a stolen laptop – and suddenly you're wishing you'd sorted it sooner.

If you're running a small business in London – whether it's a café, a fitness studio or a market stall, or even if it's just you working from home – having the right cover in place isn't just smart. In some cases, it's the law.

This guide breaks it all down without the fluff: what you actually need, what's optional but useful, and how to get insured without spending hours decoding confusing terms.

Whether you've launched recently or been trading for years, you can find clear, practical advice here.

Why is business insurance so important?

Even if you're just starting out, insurance can save your business from financial disaster. It protects you from things like:

• Accidents – Someone slips in your shop or studio.

• Damage – A fire destroys your stock or equipment.

• Legal claims – A client sues you for bad advice or faulty work.

• The unexpected – Theft, floods, illness – the list goes on.

Without insurance, you'd have to cover these costs yourself, and that could be enough to put a small business under.

What insurance do I have to get?

Let's start with what the law says. In the UK, most types of business insurance are optional – but there's one big exception:

Employers' liability insurance (a legal requirement!)

If you employ anyone – even part-time, freelance or temporary staff – by law you must have employers' liability insurance. It needs to cover you for at least £5 million and come from an authorised insurer.

This protects your business if an employee is injured or becomes ill because of their work and decides to claim against you.

Important: You can be fined £2,500 for every day you're not properly insured.

What other types of insurance should I consider?

Even if they're not required by law, many types of insurance come strongly recommended – especially for small businesses that don't have big savings to fall back on.

Here are the main ones to know about:

Public liability insurance

Covers you if someone (a customer, visitor or member of the public) is injured or their property is damaged because of your business.

For example:

• A customer trips on a loose mat in your café.

• You spill hot wax on a client's handbag.

• A falling sign damages a parked car outside your shop.

Even if you work from home or at client locations, this insurance can be crucial. Typically, you'd cover yourself for £1 million to £5 million.

Professional indemnity insurance

This is for businesses that give advice, provide professional services or handle client data.

It protects you if a client claims you've made a mistake, given bad advice or been negligent.

It's often used by:

• Consultants.

• Designers.

• Accountants.

• Marketing professionals.

Some clients or contracts might ask you to have this before working with them.

Contents and equipment insurance

If you rely on specialist tools, stock or expensive equipment, this can protect your business assets if they're stolen, lost or damaged.

You can cover:

• Computers and electronics.

• Kitchen or salon equipment.

• Tools or materials.

• Stock and supplies.

You can also look into buildings insurance if you own your premises – though your landlord usually handles this if you rent.

Business interruption insurance

If something unexpected (like a fire or flood) means you can't trade for a while, this helps cover lost income and fixed costs (like rent or wages).

Product liability insurance

If you make or sell products (including food), this covers you if someone claims your product caused them harm or damage.

Cyber insurance

If your business stores customer data or takes payments online, cyber insurance helps protect you if you're hacked or suffer a data breach.

How do I know which cover I actually need?

Good question – and the answer depends on your business. Here's a simple way to start:

1. Think about your risks. What could go wrong? Who might claim against you?

2. Make a list of your assets. What do you need to protect (tools, stock, staff)?

3. Check contracts or regulations. Are there any legal requirements or client expectations?

4. Talk to others in your industry. What cover do they have?

5. Get quotes and advice. Speak to a broker or comparison site (more on that below).

Where do I buy business insurance?

You've got a few options:

1. Comparison websites

These let you compare quotes from different insurers. Some well-known ones include:

• Simply Business

• Compare the Market

• MoneySuperMarket

They're a good place to get a feel for prices and what's available.

2. Insurance brokers

A broker can give you personalised advice and help you find the right policy. This is especially useful if your business is a bit more complex or if English isn't your first language.

Look for brokers who specialise in small business insurance.

3. Direct from insurers

You can also go straight to companies like AXA, Hiscox, Aviva or Direct Line for Business. Some offer quick online quotes.

Tips when buying insurance

• Don't just go for the cheapest. Make sure the cover is actually right for your business.

• Be honest. If you leave something out or give the wrong info, your policy might not pay out when you need it most.

• Read the small print. Especially the exclusions (what's not covered).

• Review regularly. As your business grows or changes, your cover might need updating.

What if I work from home or am self-employed?

Even if you're a sole trader working from your kitchen table, you might still need insurance – especially public liability or professional indemnity.

Also, check your home insurance. It might not cover business activity – and in some cases, working from home without telling your insurer could void your home cover entirely.

Sector spotlight: fitness, beauty, health and food businesses

Some types of businesses – especially those working with people or products – have extra things to think about.

Hairdressers, barbers, beauty salons, massage therapists

• Public liability insurance – Essential, in case a client is injured or has a reaction to a treatment.

• Treatment risk cover – This is an add-on that covers claims specifically related to treatments.

• Product liability – If you sell products (like shampoo or skincare), this protects you if someone reacts badly.

• Equipment cover – For tools like clippers, wax machines, chairs and so on.

Some salon landlords also require tenants to have insurance as part of their lease.

Personal trainers, yoga teachers, fitness instructors

• Public liability – If someone is injured during a class or on your premises.

• Professional indemnity – If someone claims your training advice caused an injury.

• Equipment cover – If you own mats, weights or machines.

• Employers' liability – If you hire assistants or reception staff.

You might also need specific cover for teaching in parks or rented studios – check the terms.

Cafés, food trucks, caterers, takeaways

• Public liability – If a customer is hurt on your premises.

• Product liability – If someone gets ill from your food.

• Contents and equipment – Ovens, fridges, tills – essential to insure.

• Stock cover – In case ingredients are ruined (in a power cut, for example).

• Business interruption – If you can't open due to fire, flood or similar.

• Employers' liability – If you have staff.

If you sell alcohol, you'll also need the right licensing – insurance won't cover you if you're trading illegally.

Final thoughts

Insurance might not be the most exciting part of running a business, but it is one of the most important.

It gives you peace of mind, protects your reputation and can be the difference between bouncing back after a problem – or shutting down.

Start small, focus on the essentials and build your cover as your business grows. And if in doubt? Ask for advice – from brokers, other business owners or free services like Grow London Local.

You're building something great – make sure it's protected.

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