A business insurance pack bundles the cover most small firms need into a single policy, so you buy liability, property and interruption protection together rather than piecing them out. It saves time and usually costs less than separate policies, but the standard package rarely fits every trade. Check the cover against your actual risks before you rely on it.
This guide explains what a typical pack includes, what it leaves out, and how to size the cover to your business.
What a pack typically includes
Most packs are built around a core of liability and property cover, with optional sections you add by trade. The common building blocks are:
- Public liability, for injury to a third party or damage to their property caused by your business.
- Employers’ liability, which is a legal requirement if you employ anyone, with a minimum limit set by law.
- Buildings and contents, covering your premises, stock, tools and equipment against fire, theft, flood and similar perils.
- Business interruption, which replaces lost income while you recover from an insured event.
- Optional sections such as professional indemnity, goods in transit, stock in a cold store, or cover for tools away from the premises.
For the two liability sections in detail, read public liability vs employers’ liability. For the income-protection section, see business interruption insurance explained. If you give advice or provide a professional service, professional indemnity insurance may matter more than any other section.
What the standard pack leaves out
A packaged policy is priced on assumptions about a typical firm in your trade. Those assumptions do not always hold. The gaps that catch small firms out include:
- Cyber cover, which is often excluded or offered as a thin add-on despite being a leading cause of loss for small firms.
- Professional indemnity, which is not always included even where the firm gives advice.
- Business interruption limits that are too low or set for too short a recovery period.
- Tools, stock or equipment above the pack’s standard sum insured.
- Work carried out at height, underground, or away from your main premises.
Underinsuring your property or stock triggers the average clause, which cuts your payout in proportion to how far you were underinsured. Set the sums insured to the true rebuild and replacement cost, not a rounded-down estimate.
How to size the cover to your business
Start from your risks, not the price. Work through four questions before you buy.
- What would stop you trading, and for how long? That sets your business interruption limit and indemnity period.
- Who could you injure or whose property could you damage? That sets your public liability limit.
- Do you employ anyone, including part-time or casual staff? If so, employers’ liability is compulsory.
- What is the full replacement cost of your premises, stock, tools and equipment? That sets your property sums insured.
Give the insurer or broker an accurate description of what you do and disclose anything unusual. A misdescription of your trade or turnover is a common reason claims are reduced or refused.
Packs are sold direct by insurers and through brokers, who can tailor the sections to your trade. Under the Consumer Duty, firms must offer products that give fair value and clear information, which the FCA monitors. If a claim is refused and you believe the decision is unfair, use the insurer’s complaints process, then take an eligible complaint to the Financial Ombudsman Service. Note that only smaller businesses meeting the eligibility rules can use the Ombudsman. Our guide to complaining about an insurer or broker sets out the steps.
Sources
- Employers’ Liability (Compulsory Insurance) Act 1969, legal requirement to hold employers’ liability cover.
- Financial Conduct Authority, Consumer Duty and small-business eligibility for the Financial Ombudsman Service.