Legally required and actually required are two different lists
There is exactly one insurance a general small business is obliged by statute to hold, and it is not the one you get asked for. That gap is the whole subject.
Employers liability: the only compulsory one
Employers liability is the insurance the law requires once you have employees. It covers claims by the people who work for you, it has a statutory minimum level, and the penalty for being without it accrues for every day uninsured rather than arriving as a single fine.
The trap is who counts as an employee. Engaging somebody as a subcontractor does not settle it, because what matters is the substance of the arrangement rather than the wording of the invoice. That is a bad thing to be wrong about, since it means being uninsured for exactly the person you were most likely to be liable for.
Public liability: not required, and unavoidable
Public liability is not currently a legal requirement. It is also the policy you will be asked to evidence more often than anything else you own.
Principal contractors, commercial clients, local authorities, letting agents and a good many householders will simply not engage a business that cannot produce a certificate. On a construction site it is a gate condition. So "not legally required" is a technically correct and completely useless answer to somebody deciding whether to buy it.
What it covers is the other side of the fence from employers liability: claims by clients, members of the public and passers-by, and damage to property that is not yours. Most businesses working on other people's premises need both, because one policy covers the workforce and the other covers everybody the workforce is standing next to.
Professional indemnity: when the mistake is in the advice
Professional indemnity answers a different kind of claim. Not somebody being hurt or something being broken, but somebody losing money because of what you advised, designed, specified or certified.
It is not a legal requirement for general businesses. It is required by the FCA of the firms it regulates, and by several professional bodies of their members, which is why some trades treat it as mandatory and others have never held a policy in their lives. If any part of what you sell is judgement rather than labour, it is the one worth asking about.
The ones on neither list
Liability insurance responds to what you do to other people. It does nothing whatsoever about your own property, and that is where the surprise usually lands.
Tools and plant are typically covered under their own section or a separate policy, often with conditions about overnight storage that matter far more than the limit does. A van is insured separately again, with its own question about whether business use is actually included. Neither is required by law or by a client, and the theft of a van full of tools is the event most likely to stop a small business trading.
What this page will not do
It will not tell you what limit to buy, what a policy should cost, or which insurer to use. This site does not sell insurance and has nothing to gain from an opinion on any of that.
What is worth knowing before you speak to anybody is which of the four rows above applies to you and why, because that is the part a broker has no incentive to slow down and explain.
Checking the one that is compulsory
The employers liability checker covers whether you need it, the two exemptions that people reach for wrongly, the statutory floor and the fact that displaying the certificate is a separate duty with its own penalty.
Where the question underneath is whether the people working for you are employees at all, employee, worker or self-employed is where that gets decided, and it drives the insurance answer as much as it drives holiday pay. And if a client is asking for evidence of cover as part of a contract, terms and conditions is where your own obligations in the other direction should be written down.
Common questions
Which business insurance is actually required by law?
Employers liability, and essentially nothing else for a general business. It becomes compulsory once you have employees, it carries a statutory minimum level of cover, and the penalty for going without it is charged for every day you are uninsured rather than as a single fine. Every other policy people talk about is voluntary as far as the law is concerned, which is a very different thing from being optional in practice.
Is public liability insurance compulsory?
No, and it is the one you will be asked for most often. Public liability is not currently a legal requirement anywhere in the UK. It is, in practice, unavoidable for anybody working on other people’s premises, because principal contractors, commercial clients, local authorities and most letting agents will not engage a business that cannot produce a certificate. So the honest answer is that it is not required by law and is required by almost everybody who might pay you.
What is professional indemnity for?
Claims arising from advice, design or professional services rather than from physical harm or damage. If a client says they lost money because of a mistake in what you told them, specified or drew, that is professional indemnity territory rather than public liability. It is not a legal requirement for general businesses, and it is required of firms regulated by the FCA and by several professional bodies of their members, which is why some trades treat it as mandatory and others have never held it.
Do I need employers liability if I only use subcontractors?
Possibly, and this is the question that catches people out, because calling somebody self-employed does not settle it. What matters is the substance of the working relationship rather than the label on the invoice, and somebody engaged as a subcontractor can still be treated as an employee for these purposes. Getting it wrong is expensive in a specific way: you are uninsured for the person you were most likely to be liable for.
Is public liability the same as employers liability?
No, and the split is who got hurt. Employers liability covers claims by the people who work for you. Public liability covers claims by everybody else: clients, members of the public, passers-by, and damage to property that is not yours. A business with staff working on customer premises usually needs both, because one policy covers the workforce and the other covers everyone the workforce is near.
What about my tools and my van?
Different policies again, and they are the ones most often missing when something actually happens. Tools and plant are typically covered under their own section or policy rather than by any liability cover, and a van is insured separately with its own question about whether business use is included. Liability insurance responds to what you do to other people. It does nothing at all about your own property being stolen out of a vehicle overnight.