Setting up a limited company is both exciting and nerve-wracking. It´s a lot of big and important decisions made all at once, and one of these will be, “What insurance do I need?”
It can be overwhelming to try to understand all the different insurances for limited companies, especially since some are legal requirements and others are optional. Not to mention that this is different depending on the type of business you run!
If your head is spinning when it comes to insurance, we´ve got you covered. This guide breaks down the must-have insurances for a limited company and shines a light on extra protections for your growing business.
Essential insurance for every limited company
- Employers’ liability insurance
If you employ staff, this insurance is a legal requirement, with a statutory minimum cover level of £5m. It safeguards your business against claims from employees who might suffer injury or disease as a result of their work.
- Public liability insurance
While there’s no statutory minimum for public liability cover, most businesses will require you to have this insurance before they allow you to begin work. Why? Because it´s crucial to protect you and your business against third-party compensation claims. Coverage levels typically range from £1m to £10m, with some professional associations mandating it as part of their membership criteria.
- Business use of vehicle insurance
Most people have personal car insurance, so for those using personal vehicles for business purposes, check that your policy includes business use. It is essential that this is covered to avoid potential pitfalls.
Neglecting these insurances can lead to dire consequences, but the good news is they are generally affordable and readily available. It’s always best to err on the side of caution and opt for more comprehensive coverage.
Looking for help starting up your business? Contact us at [email protected] now.
Industry-specific and growth-related insurance
You could also need other forms of insurance, depending on what kind of business you have:
- Professional indemnity insurance: This is particularly vital for professional service providers like accountants and solicitors, as it covers claims against you for professional negligence or faulty advice.
- Product-related insurance: If your business sells products, consider insurance for goods in transit, on-the-shelf contents, or post-sale product liability.
- Cyber insurance: In this modern and technology-driven world, protecting against data breaches and cyber threats is increasingly important, making cyber insurance a wise consideration.
- Office and content insurance: As your physical assets grow, insuring your office contents can safeguard you against unforeseen losses.
- Business interruption insurance: If your business is forced to close down due to a disaster, business interruption insurance will replace the lost income.
Buy based on your needs
There are all sorts of unfortunate consequences of not having the right insurance. The good news is that since every business needs these insurances, they tend to be both inexpensive and easily available. The bad news, however, is that understanding your insurance needs as you grow can be confusing!
What insurance coverage you need obviously depends upon your business circumstances, so as your business start-up progresses, you may well need to speak to an insurance broker to make sure you have the right coverage. By all means, do some research online, but we recommend always getting some advice from an insurance professional before you buy.
While it´s always better to be over-insured rather than under-insured, it´s also good not to be paying for a bunch that you don´t actually need!
If you don´t know an insurance broker or would like some help in creating your limited company, please contact us at [email protected].
