29 Jul 2025
By Murray Stewart, Partner, and Head of Real Estate, Gilson Gray
Introduction
Running a trading business – whether manufacturer, wholesaler, retailer or service sector – comes with numerous risks regardless if you are dealing in consumer goods, electronics, machinery, or raw materials. From protecting your inventory and premises to safeguarding your employees and financial health, having the right insurance is not just prudent; it’s essential. In today’s volatile business environment, unforeseen events like theft, fire, cyberattacks, or litigation can severely disrupt operations or even bring a business to a halt.
1. Public Liability Insurance
Public liability insurance is fundamental for any business that interacts with the public. It protects against legal costs and compensation claims if a third party is injured, or their property is damaged, because of your business operations. For a trading business, this could include:
Even if such events seem unlikely, the costs associated with defending claims or paying compensation can be financially devastating without appropriate coverage in place.
Where a property is leased by the occupier then the occupier should check their lease to establish whether they or the owner of the property are responsible for maintaining public liability insurance. If the owner is responsible, the occupier should also confirm the extent to which that cover provides the occupier with protection.
2. Product Liability Insurance
If your business is involved in manufacturing, importing, distributing, or selling products, you should have product liability insurance. This policy covers claims arising from injuries or damages caused by defective or unsafe products. Trading businesses often serve as the link between manufacturers and end users. If a product you sell turns out to be faulty or dangerous, your business can be held liable, even if you didn’t produce it. Product liability insurance is vital for limiting your financial exposure in such cases.
If your business operates in the service sector then this is likely to take the form of professional indemnity insurance.
3. Property Insurance
Whether you own or lease your business premises, property insurance is crucial. It protects your physical assets such as buildings, equipment, inventory, and furniture against risks like:
For trading businesses that maintain stock in warehouses or retail locations, this type of insurance ensures that damage to or loss of goods doesn’t result in insurmountable financial loss.
These policies frequently comprise of two different components – buildings insurance and contents insurance. As you might anticipate, buildings insurance provides coverage in respect of physical damage to the building itself and the occupiers’ fit-out whereas the contents cover is in respect of moveable items (equipment, inventory and furniture) located at the property.
Where a property is leased by the occupier the owner of the property will typically put in place buildings insurance (including a sum to cover the owner for loss of rent in the event of damage/destruction) and recover the premium from the occupier. However, the occupier will generally always be responsible for taking out cover in respect of their own contents.
4. Business Interruption Insurance
If a fire, flood, or another disaster forces you to shut down operations temporarily, business interruption insurance can help. It covers lost income and ongoing expenses (like rent and wages) during the downtime. This can be a lifeline for businesses that rely on continuous inventory movement, supplier timelines and customer demand. Even a short-term closure could lead to significant losses and lost contracts without this safety net.
5. Marine and Inland Transit Insurance
For a trading business that regularly transports goods, whether locally or internationally, marine and inland transit insurance is essential. It covers the loss or damage of goods while they’re in transit, whether by road, rail, air, or sea. Shipping delays, accidents or losses can severely disrupt your supply chain. With marine insurance, you’ll have peace of mind that your goods are protected from the moment they leave your warehouse to the time they reach their destination.
6. Employers’ Liability Insurance
If your business employs staff, even just one person, you are legally required to maintain employers’ liability insurance. This coverage protects you against compensation claims made by employees who are injured or become ill as a result of their work. However, it’s not just about legal compliance, it’s a sign of good business practice. Taking care of your employees helps build trust and protects your business from legal risks.
7. Cyber Insurance
With the rise in digital transactions and cloud-based inventory systems, cyber insurance has become increasingly relevant for trading businesses. It offers protection against losses due to:
Even small trading businesses can be targeted by hackers. The financial and reputational damage of a cyber incident can be significant, making this insurance an essential addition to your risk management strategy.
8. Directors’ and Officers’ (D&O) Insurance
D&O insurance protects the personal assets of a company’s directors and senior officers in the event they are sued for alleged wrongful acts in managing the business. For trading companies with complex supply chains, fluctuating international markets, or multiple stakeholders, this coverage helps attract and retain strong leadership by shielding key decision-makers from personal liability.
9. Trade Credit Insurance
This type of insurance protects your business against the risk of customers failing to pay their invoices, whether due to insolvency, protracted default, or political risks in overseas markets. For a trading business that deals with large volumes and extended credit terms, even a single customer default can severely impact cash flow. Trade credit insurance ensures greater financial stability and helps you extend credit more confidently.
10. Key Person Insurance
Key person insurance, also known as key man insurance, is a type of life and critical illness insurance policy taken out by a business to protect itself from the financial consequences of losing a crucial member of staff. This individual’s absence due to death, critical illness, or disability could significantly impact the business’s profitability and operations. The policy provides a lump-sum payout to the business, which can be used to cover lost profits, recruitment costs for a replacement or to pay off debts.
Conclusion
Insurance may feel like just another overhead, but for trading businesses, it’s an essential component of risk management. The right mix of policies can protect your assets, people, and reputation, allowing you to focus on growth and operations with greater peace of mind.
Every business is unique, so it’s wise to take professional advice and ensure you have a tailored package of protection specific to the needs of your business. We regularly consult with clients regarding their insurance needs and to ensure that they are getting the specialist advice they need. If you need support ensuring that your business has comprehensive coverage in place, then do please get in contact.
The Gilson Gray Real Estate Team have a wealth of experience acting for investors across all types of commercial property. If you are an experienced commercial property investor or looking to make your first commercial property acquisition do please do get in contact to discuss your requirements.
