What insurance does my limited company need?

You may not think that running a limited company is risky, and the majority of time it’s not. Yet, it’s important that you try and plan as much as possible for scenarios that could affect your business and your income.

Taking out insurance is the best way of protecting your business. Here is a breakdown of the different types of insurance that you should consider for your limited company:

Public Liability Insurance

Public Liability Insurance will protect your limited company from claims by customers, members of the public or people who visit your business, for accidental injury and property damage.

Whilst it is not a legal requirement for you to have this, if you do have people coming to your premises for meetings etc, it is strongly recommended that you take out Public Liability Insurance.

A simple trip on a step could cost your business thousands in compensation and legal costs. You’ve got to ask yourself, without insurance, could I afford to pay this?

Employers Liability Insurance

It is a legal requirement of any business who has employees to have Employers Liability Insurance. You must organise cover as soon as you take on your first employee and the insurance must cover you for a minimum of £5 million and be provided by an authorised insurer.

Employers Liability Insurance provides cover for claims made against the business if an employee or ex-employee suffers illness or injury through their work.

If your limited company employs one or more individuals or has more than one director (even if they are family members) you are required to have Employers Liability Insurance.

Failure to obtain Employers Liability Insurance could see you being fined £2,500 for every day you are without it. Plus, you could be fined a further £1,000 for not displaying your Employers Liability certificate.

Professional Indemnity Insurance

Professional Indemnity Insurance is vital for contractors who offer advice or provide a professional service to clients. If for any reason a client suffers a financial or professional loss through a mistake you make, they can sue you for compensation and legal costs. Compensation usually considers the financial loss they have suffered, so it could run into the tens of thousands.

The types of mistakes that Professional Indemnity Insurance covers includes:

• Unintentional copyright infringement (e.g. using a copyright image without permission)
• Loss of documents or data
• Unintentional breach of confidentiality (e.g. sharing sensitive information without consent)

From conversations we have had with contractors, it looks like clients are requiring contractors and freelancers to have Professional Indemnity Insurance in place prior to working with them. So, if you haven’t got it, maybe it’s something you should be looking into.

Income Protection

Even though self-employment provides numerous benefits, the biggest downside is if you are unable to work, you don’t get paid. Whilst, Income Protection is technically not an insurance, it provides a regular income if you are unable to work due to illness or disability. The policy will pay out until you are well enough to work again, or until the end of the policy, whichever comes first.

This can be a massive help and will be a huge relief knowing that you have money coming in that you can use to pay the mortgage or monthly bills.

If you are thinking of becoming a contractor and are not sure how to start, our Guide to Contracting details everything you need to know. You can download a copy here, or alternatively if you are interested in our contractor accounting packages, give our team a call on 01962 867550.