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What is limited company insurance and do you need it?

  • 4 min read
  • Last updated 18 Jun 2024

When you’re starting and running a business, getting insurance might seem like the boring paperwork you’d rather put to the bottom of the pile. But protecting your business from any potential risks is important and it’s not as complicated as it might seem. So, what is limited company insurance and do you need it?

We’ll talk you through the different types of limited company insurance, so you can figure out what your business really needs.

What exactly is limited company insurance?

In an ideal world, a single insurance policy would cover your entire limited company. Safety first, and all. But in the real world, it doesn’t quite work like that.

Limited company insurance refers to the different types of insurance your company should consider. This includes everything from employers liability insurance (which is a legal requirement) to contents and equipment insurance. Oh the joy!

While you probably won’t need them all, it’s a good idea to get to grips with the different types of limited company insurance and who might need them. This way, you can make a decision on which policies are right for your business.

So let’s take a closer look at the different types of insurance to consider.

If you’re not sure what you need…

Get professional advice from an accredited accountant. They can help guide you through the beginnings of your limited company and advise you how to stay tax-efficient!

A must-have: Employers’ Liability Insurance

If you hire employees, this is the only policy you’re legally required to have. 

Employers’ Liability (EL) Insurance covers any claims from your employees if they suffer work-related injuries or illnesses. That’s why EL is so important. Think of it as a safety net for both your business and your team.

And for every day you don’t have EL insurance, the Health and Safety Executive could hit you with a huge £2,500 fine. Ouch!

The minimum protection limit is ÂŁ5,000,000, but most insurers offer ÂŁ10,000,000 as standard. 

So, don’t wait around on this one. Get Employers’ Liability insurance sorted from day one to keep your business and team covered.

You won’t need EL if you’re the sole employee of your company. In this case, there are other insurance policies you could benefit from. We’ve outlined them below.

Other types of insurance you’ll need to consider

Public liability insurance

If your business deals with customers and clients, public liability (PL) insurance isn’t a requirement but it’s definitely a wise investment.

Accidents happen, and public liability insurance covers your business against injury to third parties (like customers). It also covers accidental damage to your property, which could save you thousands in repair costs.

You might find that some clients require you to have PL before agreeing to work with you, so it’s definitely worthwhile.

Contents and portable equipment insurance

Content insurance is designed to keep your business running, no matter what happens. It protects your physical assets in the event of theft, fire, flooding, loss or damage. Think of it as home insurance for your business.

Portable equipment insurance covers things like phones, laptops and cameras. Pretty much everything you could carry with you on the move.

While it’s not mandatory, contents and portable equipment insurance can definitely offer some reassurance.

Professional indemnity insurance

Professional indemnity insurance is made for businesses dishing out professional services or advice. It covers any legal costs and claims if you make a mistake and a client suffers financial loss.

So, do you really need it? If you’re a service-based business, like consultants, architects or accountants, then most definitely.

Directors and Officers (D&O) insurance

D&O insurance is also known as management liability insurance. And it’s super important if you’re a founder or director.

D&O insurance protects you as an individual, rather than the business as a whole. It can protect you against personal claims (including health and safety breaches) and will cover any legal fees, settlements and other costs associated with the claim. 

If you’re at the helm as a company director, you’ll probably want to invest in D&O insurance.

Cyber insurance

In a world where even your grandparents are on the internet, it’s safe to say that if your business isn’t online, you might want to check if you’ve been living under a rock! 

But fear not, because cyber insurance has your back. Cyber insurance protects you from online threats like data breaches and hacking, covering costs for lost data, business disruptions and legal fees.

You don’t have to be TikTok famous to consider cyber insurance. If your business is operating online, it could definitely offer some peace of mind. 

Income protection insurance

Ever wondered what would happen to your finances if you were unable to work due to an accident or illness? It’s a scary thought, but fear not – income protection insurance might be the answer.

Income protection insurance essentially provides you with replacement income, whether it’s for the short term or the long haul. So, if life throws you a curveball, you can rest easy knowing your finances are protected.

This could be a great policy if you’re a super small limited company – or even operating solo!

Even more support for your limited company

Why stop there? Get all the support you need with your company taxes from an accredited accountant through our limited company tax service. Let us sort your year-end accounts and corporate tax return without the stress.

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