A self-employed consultant working from home could pay very differently from a builder employing five people, even if both businesses have the same annual turnover. Your occupation, number of employees,…
A self-employed consultant working from home could pay very differently from a builder employing five people, even if both businesses have the same annual turnover.
Your occupation, number of employees, level of cover, claims history, where you work and the type of insurance you choose can all affect the premium an insurer offers. AXA, for example, lists occupation, work location, staff numbers and other risk factors among the things that influence public liability pricing.
That means the useful question is not simply, “What does business insurance cost?”
It is:
What should a business like mine expect insurers to consider when calculating the price?
Let’s break it down.
How Much Is Business Insurance in the UK?
Some basic small business policies can start at only a few pounds per month, but these advertised starting prices should not be confused with the typical price for every business.
For example, AXA currently states that public liability insurance starts from £6 per month, with 10% of its customers paying £62 per year or less during January to March 2026.
Hiscox gives a similar starting point, with public liability quotes from £5.20 per month, based on policies sold to at least 10% of its customer base between April 2025 and April 2026.
These figures are useful as examples of how inexpensive basic cover can sometimes be for lower-risk businesses.
However, they are not average prices for all UK businesses.
Your own quote could be considerably higher depending on your work and the protection you need.
Why Business Insurance Prices Vary So Much
Insurance pricing is based largely on risk.
An insurer is trying to estimate two things:
How likely is your business to make a claim?
and
How expensive could that claim become?
Hiscox explains that insurers consider the likelihood of a claim and its potential cost when calculating public liability premiums.
Consider two businesses.
The first is a freelance copywriter working alone from home.
The second is a building contractor working at customer properties with employees, machinery and expensive tools.
Both may be small businesses, but their exposure to accidents, property damage and employee claims is very different.
Naturally, their insurance prices may also be very different.
If you’re still deciding which covers actually apply to your company, read our guide to what business insurance a small business needs in the UK before comparing prices.
1. Your Type of Business
Your occupation is one of the biggest influences on business insurance pricing.
Some activities naturally create more opportunities for costly claims.
For example, compare:
An accountant working from a laptop.
A window cleaner working at height.
A builder carrying out structural work.
A retailer serving hundreds of customers.
A consultant advising companies on major financial decisions.
Each has a different risk profile.
AXA specifically identifies occupation as one of the factors affecting public liability premiums because some trades involve greater exposure to equipment, machinery and accidents.
This is why comparing your insurance price with a completely different type of company usually tells you very little.
2. The Insurance Cover You Choose
“Business insurance” is not one single policy.
You may combine several covers, such as:
- Public liability
- Employers’ liability
- Professional indemnity
- Tools and equipment insurance
- Product liability
- Cyber insurance
- Business interruption cover
- Commercial property insurance
Naturally, a business buying several forms of protection may pay more than one purchasing only a basic liability policy.
If you are new to these different types of cover, our Business Insurance Basics UK guide explains what each one is designed to protect.
3. Your Level of Cover
The amount of protection you choose can also influence your premium.
Public liability policies, for example, may provide limits running into millions of pounds. AXA offers public liability limits starting at £1 million and increasing to as much as £10 million, depending on the policy and business requirements.
Hiscox similarly offers public liability cover up to £10 million.
A business that needs £10 million of cover may therefore receive a different quote from one requiring £1 million.
But choosing the lowest possible limit simply to reduce your premium is not always sensible.
Your required level may also be influenced by:
- Client contracts
- Industry standards
- Trade associations
- Landlords
- Local authorities
- Tender requirements
Hiscox notes that some clients may expect businesses to carry £5 million or even £10 million of public liability cover.
The aim should be to choose an appropriate amount of protection rather than automatically selecting either the cheapest or highest limit.
4. Number of Employees
Employing people changes both your risk profile and, in many cases, your legal insurance responsibilities.
AXA identifies staff numbers as one factor that can affect public liability pricing because more employees can create greater exposure to accidents or negligence claims.
Employers also need to consider employers’ liability insurance.
In Great Britain, businesses that fall within the compulsory insurance requirements must obtain employers’ liability insurance as soon as they become an employer and carry at least £5 million of cover from an authorised insurer.
Northern Ireland also has compulsory employers’ liability requirements, with HSENI stating a minimum £5 million level of cover.
So moving from a one-person business to employing staff can change more than your payroll — it can also change your insurance requirements and costs.
5. Your Annual Turnover
Turnover can help insurers understand the scale of a business.
A company turning over £30,000 a year may have a very different level of activity from one generating £3 million.
Higher turnover can sometimes mean:
More customers.
More contracts.
More transactions.
More products.
More work.
Potentially greater exposure to claims.
However, turnover should not be viewed in isolation.
A high-turnover, low-risk digital business could still have a very different insurance profile from a lower-turnover company carrying out physically dangerous work.
6. Where You Work
The location and way your business operates can affect insurance pricing.
A consultant working exclusively from home may have limited physical interaction with members of the public.
A shop on a busy high street could have hundreds of people entering the premises each week.
A contractor may work across dozens of customer properties.
AXA identifies the place where work is carried out as one factor affecting public liability pricing, particularly where businesses operate in locations with greater public interaction.
Think about where your risks actually occur:
At your own premises?
At customers’ homes?
On construction sites?
At public events?
Online?
In a vehicle?
Those differences can affect the type and price of insurance you need.
7. Your Claims History
Previous claims can also matter when insurers calculate premiums.
A company that has experienced repeated claims may be viewed differently from a similar company with no recent claims.
AXA lists claims history as one of the factors considered when assessing public liability insurance.
This does not mean one previous claim automatically makes insurance unaffordable.
But insurers may want to understand what happened and whether anything has changed since the incident.
8. The Excess You Choose
An insurance excess is the amount you may need to contribute towards an eligible claim before the insurer pays the remaining covered amount.
Policies can have different excess arrangements.
In some situations, choosing a higher excess may reduce the premium because you are agreeing to retain more of the initial risk yourself.
However, do not choose an excess your business would struggle to pay.
Saving a relatively small amount on the annual premium makes little sense if the excess later becomes financially difficult when you need to make a claim.
9. Your Tools and Equipment
Businesses that own expensive equipment need to think about replacement cost.
Imagine a tradesperson carrying £10,000 worth of specialist tools.
Compare that with a consultant whose main business equipment is one £800 laptop.
The amount and type of equipment that needs protection can influence the insurance required and its cost.
Contractors, tradespeople and mobile businesses should also check where their tools are insured.
Equipment sitting inside your business premises may present a different risk from tools that are regularly transported between customer sites or left in vehicles.
For more on this area, see our Tools & Equipment Insurance guides.
10. Cyber Risk
A business that stores sensitive customer information or relies heavily on digital systems may consider cyber insurance.
But cyber risks differ substantially between businesses.
Consider the difference between:
A sole trader with a simple brochure website.
An ecommerce company processing thousands of customer orders.
A professional firm storing confidential client records.
A software company hosting customer data.
Their potential cyber exposure is not the same.
The amount of data you hold, how dependent you are on technology and the security measures you use may all be relevant when looking for cyber protection.
Businesses concerned about this area can explore our Cyber Insurance & Risk section.
How Much Does Public Liability Insurance Cost?
Public liability is one of the easiest types of business insurance to find advertised starting prices for.
As of 2026, AXA states that prices can start at £6 per month, while Hiscox advertises prices from £5.20 per month for qualifying businesses.
But these are starting figures, not promises that your business will receive the same price.
The actual premium depends on your own circumstances.
A freelance graphic designer and a roofing contractor should not expect identical pricing simply because both want £1 million of public liability insurance.
How Much Is Employers’ Liability Insurance?
There is no fixed UK price for employers’ liability insurance.
The premium can depend on factors such as:
- Number of employees
- Type of work
- Payroll
- Workplace risks
- Claims history
- Level of cover
What matters legally is the required protection rather than a universal premium.
For employers covered by the compulsory rules in Great Britain, GOV.UK states that the policy must provide at least £5 million of cover.
Do not confuse a £5 million cover limit with the price of the policy.
You are not paying £5 million.
That number refers to the maximum level of insurance protection required under the compulsory rules.
How Much Does Professional Indemnity Insurance Cost?
Professional indemnity premiums can vary significantly because professional risks vary significantly.
Think about the potential consequences of a mistake.
An independent designer producing a £500 logo may have a very different exposure from an engineering consultant advising on a multimillion-pound project.
Factors that can influence professional indemnity pricing include the nature of the professional service, turnover, contract values, claims history and required level of cover.
Freelancers and consultants can read our Freelancer Insurance Guides for more targeted information about protecting independent work.
How Much Should a Small Business Budget for Insurance?
Rather than choosing an arbitrary monthly budget, start by identifying the risks that genuinely need protection.
A small business could begin with this simple process.
First, identify compulsory insurance.
If you employ staff, check your employers’ liability responsibilities.
Second, identify your biggest financial risks.
Could you face a large public injury claim?
Could professional advice cause a client financial loss?
Could losing your equipment stop you working?
Could a cyberattack shut down operations?
Third, check contractual requirements.
Some clients will specify minimum insurance limits before allowing you to work with them.
Finally, obtain quotes based on the same cover.
This last point matters.
A £120 quote and a £220 quote are not really comparable if one includes significantly more protection.
Why the Cheapest Business Insurance Is Not Always the Cheapest Option
It is tempting to sort insurance quotes from lowest price to highest and choose the first one.
But price tells only part of the story.
Imagine Policy A costs £90 per year.
Policy B costs £125.
At first glance, Policy A looks like the obvious winner.
But then you discover that Policy B provides an important type of protection your business actually needs, while Policy A excludes it.
Saving £35 no longer looks so attractive.
When comparing quotes, check:
- Cover limits
- Excess
- Exclusions
- Optional covers
- Geographic limits
- Business activities covered
- Policy conditions
- Claims support
You are buying protection, not simply a certificate.
Can You Reduce the Cost of Business Insurance?
Sometimes.
The goal should not be to remove useful protection just to lower the price.
Instead, look for unnecessary cost.
Compare Like-for-Like Quotes
Make sure insurers are quoting for similar cover limits, excesses and policy features.
Otherwise, the cheapest number may simply represent less insurance.
Keep Your Business Information Accurate
Do not estimate your turnover, employee count or activities carelessly.
Accurate information helps insurers price the business you actually operate.
Review Optional Covers
Some extras may be useful.
Others may not apply to your business.
Understand what each addition does before paying for it.
Consider Your Excess Carefully
A higher excess may sometimes affect the price, but make sure the business could comfortably pay it.
Improve Risk Management
Good safety procedures, staff training, security and record keeping are worth having regardless of insurance.
Reducing preventable business risks can also help avoid claims that might affect future insurance arrangements.
Don’t Let a Cheap Policy Automatically Renew Unchecked
A policy that was suitable last year may not be suitable today.
Your company might have:
Hired employees.
Purchased new equipment.
Increased turnover.
Started offering another service.
Moved premises.
Taken larger contracts.
Started handling more customer data.
Insurance should follow those changes.
This is why renewal should be treated as a review rather than simply allowing the same policy to continue automatically.
Our Renewal & Compliance Management section covers ways to manage renewal dates and insurance requirements more effectively.
Keep Track of Your Insurance Costs
If your business has several policies, insurance administration can become messy surprisingly quickly.
You may have different:
- Providers
- Policy numbers
- Premiums
- Renewal dates
- Certificates
- Cover limits
- Payment schedules
Keeping all this information in one place makes annual reviews much easier.
Instead of discovering a renewal three days before the deadline, you can see what is coming and have time to compare options.
Our Insurance Admin & Digital Tools guides cover practical ways to manage policy information and reminders.
Business Insurance Cost Example
Imagine two fictional businesses.
Business A: Freelance Marketing Consultant
One person works from home.
There are no employees.
Most client meetings happen online.
The main risks may involve professional advice, a laptop and digital information.
This business might focus on professional indemnity, cyber protection and equipment cover rather than buying every type of commercial insurance available.
Business B: Building Contractor
The contractor employs several workers.
The team works at customers’ properties.
They use specialist tools.
There is regular interaction with customer property and members of the public.
This business may need to think about employers’ liability, public liability, tools cover and other construction-related risks.
Even if both businesses generate similar revenue, it would make little sense to expect them to receive the same insurance price.
Their risks are completely different.
How to Compare Business Insurance Quotes Properly
When you receive several quotes, put them side by side.
Don’t compare only the premium.
Compare:
Annual cost
How much will you actually pay over the full year?
Cover limit
How much protection does the policy provide?
Excess
What would you need to contribute towards a claim?
Included insurance types
Does one quote contain additional useful cover?
Exclusions
What situations are not covered?
Business description
Has your actual work been described correctly?
Payment method
If paying monthly, check whether the overall cost differs from paying annually.
A slightly more expensive quote can sometimes offer much better value.
How Often Should You Compare Business Insurance Prices?
At minimum, renewal time gives you a natural opportunity to check whether your existing cover and price still make sense.
But do not necessarily wait for renewal if your business changes significantly.
Review your insurance when you:
- Hire employees
- Buy expensive equipment
- Change premises
- Introduce a new product
- Offer a new professional service
- Win substantially larger contracts
- Expand into new markets
Changes like these can alter both your insurance needs and your risk.
Frequently Asked Questions
What is the average cost of business insurance in the UK?
There is no meaningful single average that applies to every UK business because commercial insurance can combine different covers and risks.
Advertised public liability prices currently start at around £5–£6 per month with some major UK insurers for qualifying customers, but an individual business may pay substantially more.
Is business insurance cheaper for sole traders?
Not automatically.
A sole trader may have fewer employees and lower turnover than a larger company, but pricing still depends heavily on the work being performed and the protection required.
A sole trader carrying out high-risk physical work could have greater liability exposure than a small limited company carrying out low-risk office work.
Does more insurance cover cost more?
Higher limits or additional types of cover can affect premiums.
However, the relationship is not always as simple as doubling the cover and doubling the price.
Insurers calculate premiums using several risk factors.
Is public liability insurance legally required?
Public liability insurance is generally not a legal requirement for every UK business, although clients, local authorities and contracts may require it. AXA confirms that public liability itself is not universally legally compulsory but may be requested as part of commercial arrangements.
Can I get business insurance for less than £10 per month?
Some insurers currently advertise qualifying public liability policies below £10 per month. AXA advertises prices from £6 per month and Hiscox from £5.20 per month, subject to their respective eligibility and pricing data.
That does not mean every business or every type of business insurance will cost less than £10.
Final Thoughts
So, how much does business insurance cost in the UK?
For some lower-risk businesses, basic public liability cover can start at only a few pounds per month. For businesses with employees, expensive equipment, significant professional exposure or higher-risk activities, the overall cost can be considerably higher.
The important thing is not to chase one supposed “average price.”
Look at your business.
Identify the risks that could genuinely hurt it.
Check any legal or contractual insurance requirements.
Then compare several quotes based on similar levels of protection.
The cheapest premium is useful only when the policy actually covers the risks you need it to cover.
If you’re still unsure where to begin, read our Business Insurance Basics UK guide first, followed by What Business Insurance Does a Small Business Need in the UK? to work out which types of cover are most relevant before comparing prices.
