Trade Business Insurance — What Cover Do You Need?

Insurance is one of those things most tradespeople know they need but few take the time to properly understand. The result is that many are either underinsured — leaving themselves exposed to potentially devastating claims — or paying for cover they do not actually need. Getting the right insurance in place is not just about ticking a box. It is about protecting your livelihood, your family, and everything you have built.

Here is a straightforward guide to the main types of insurance every UK tradesperson should consider, what they cover, and what they typically cost.

Public Liability Insurance

Public liability insurance is the most common type of cover for tradespeople, and for good reason. It protects you if a member of the public — usually a client or a passer-by — is injured or their property is damaged as a result of your work. For example, if you accidentally damage a client's flooring while fitting a kitchen, or a visitor trips over your tools on site, public liability insurance covers the cost of the claim.

While public liability insurance is not a legal requirement for sole traders, it is effectively essential. Most clients, main contractors, and trade directories require you to have it before they will work with you. Cover levels typically range from one million to ten million pounds, with most tradespeople opting for two to five million. Costs vary by trade and cover level but expect to pay somewhere between one hundred and three hundred pounds per year for a sole trader.

Employers' Liability Insurance

If you employ anyone — including apprentices, labourers, or subcontractors in some cases — employers' liability insurance is a legal requirement. Under the Employers' Liability (Compulsory Insurance) Act 1969, you must have a minimum of five million pounds of cover, although most policies provide ten million. Failure to hold this insurance can result in a fine of up to two thousand five hundred pounds for every day you are without it.

This insurance covers claims from employees who are injured or become ill as a result of their work. Even if you only employ one part-time labourer, you need it. The typical cost is between one hundred and five hundred pounds per year depending on your trade and the number of employees. This is one of those overheads that must be factored into your pricing — something we cover in our guide on how to price a job as a tradesperson.

Professional Indemnity Insurance

Professional indemnity insurance covers you if a client claims financial loss as a result of your professional advice or design work. This is particularly relevant for trades that involve a design element — such as architects, structural engineers, heating engineers, and electricians who design systems. If your design causes a problem that costs the client money, professional indemnity covers the claim.

Not every tradesperson needs this, but if any part of your work involves advising clients on specifications, designing layouts, or recommending solutions, it is worth considering. Cover typically costs between one hundred and fifty and four hundred pounds per year for a sole trader.

Tool Insurance

Your tools are your livelihood. If they are stolen from your van overnight or damaged on site, the cost of replacing them can run into thousands of pounds. Tool insurance — sometimes called tools-in-transit cover or all-risks tool cover — protects against theft, loss, and accidental damage to your tools and equipment.

Many standard van insurance policies do not cover tools left in the vehicle, or they impose strict conditions such as requiring the van to be in a locked garage overnight. A dedicated tool insurance policy typically costs between fifty and two hundred pounds per year depending on the total value of your tools and the cover level. It is a small price to pay for the peace of mind that your kit is protected.

Van Insurance

If you use a van for work, you will need commercial vehicle insurance rather than a standard personal policy. Driving a van for business purposes on a personal policy will invalidate your cover entirely, which could leave you personally liable for any accident. Commercial van insurance covers you for travel to and from job sites, carrying tools and materials, and the general business use that defines most tradespeople's daily driving.

Costs vary significantly based on your age, driving history, van type, and postcode, but expect to pay between eight hundred and two thousand pounds per year. Shop around and consider using a specialist broker who understands the trades — they can often find better deals than the comparison websites.

Personal Accident and Income Protection

This is the type of insurance most tradespeople overlook, yet it is arguably the most important. If you are injured and cannot work, what happens to your income? Unlike employees, self-employed tradespeople do not get sick pay. Personal accident cover pays out a lump sum if you suffer a specified injury, while income protection provides a monthly payment — typically around sixty to seventy per cent of your normal income — for as long as you are unable to work.

For a sole trader whose income stops the moment they stop working, income protection is a genuine safety net. Costs depend on your age, health, trade, and the level of cover, but a basic policy might cost between thirty and eighty pounds per month. It is worth discussing your options with an insurance adviser who specialises in self-employed cover. Having the right insurance in place is a key part of building a sustainable business — something we explore further in our guide on growing your trade business.

Getting the Right Cover

The insurance you need depends on your specific trade, whether you employ anyone, and the type of work you do. At a minimum, most tradespeople need public liability insurance. If you have employees, employers' liability is a legal requirement. Beyond that, tool insurance and income protection are strongly worth considering for the financial security they provide.

When budgeting for insurance, treat it as a non-negotiable business cost rather than an optional extra. Build it into your overheads so it is reflected in your pricing, and review your cover annually to make sure it still matches your business. Presenting these costs transparently in your quotes — as we discuss in our guide on what to include in a building quote — shows clients that you are a professional who takes your responsibilities seriously.