Insurance for a small business is usually sold as a bundle, priced as a bundle and understood by almost nobody. The result is firms paying for duplicate cover while missing the one policy that matters for their trade.
This guide sets out what a lean team genuinely needs in 2026, what can wait, and how to check you are not paying twice for the same risk.
Key facts
- General liability covers third-party injury and property damage, not your own.
- Professional indemnity matters if you sell advice or expertise.
- Workers compensation is mandatory in most places once you hire.
- Contents cover and business interruption are separate questions.
- Cyber cover is increasingly required in client contracts.
Start with the contracts you signed
Your insurance requirements are often written by someone else: a landlord, a client or a platform. Read those contracts before you shop, because they may require specific limits and named insured wording.
Buying a policy that does not satisfy a client contract is worse than buying none, because it creates the appearance of cover without the protection.
General liability is the floor
General liability covers injury or property damage you cause to someone else, on your premises or while doing the work. It is the policy most clients and landlords ask to see.
Typical limits start around a million per occurrence. Check whether the policy covers completed work and off-site visits, since trades and service firms often need both.
Professional indemnity if you sell advice
If a client can lose money because of your recommendation, design or report, professional indemnity is the relevant cover. General liability will not respond to a purely financial loss.
Consultants, designers, marketers and bookkeepers often skip this until a client contract requires it. By then it is a rushed purchase at a worse price.
Employers and workers compensation
Once you hire, workers compensation is usually mandatory, even for part-time staff. It covers medical costs and lost wages when someone is injured at work.
Do not assume a contractor is outside the scheme. If you control how and when they work, the arrangement may be treated as employment, which changes both tax and insurance.
The most expensive policy is the one that duplicates cover you already have and misses the risk you actually carry.
Property, contents and interruption
Contents cover replaces equipment and stock. Business interruption replaces lost profit while you recover. They are separate, and a cheap policy often includes the first without the second.
Estimate interruption cover from your fixed costs and the realistic time to reopen, not from annual revenue. A six-month closure is the number that matters.
Where cyber cover fits
Cyber cover pays for response costs, notification and sometimes lost income after a breach. It is becoming a standard clause in client contracts, especially where you hold customer data.
Check whether your general policy already includes a limited cyber extension. If it does, you may be buying the same protection twice under two names.
The annual review that saves money
Once a year, list every policy, its limit, its excess and the contract that requires it. Cancel duplicates, raise excesses where you hold a reserve, and update sums insured after buying equipment.
For how a policy is written and where claims fail, read how to read an insurance policy, or browse the Insurance Guide section.
Official source: sba.gov.
