Why does a limited company need insurance?
Poor professional advice
If your company deals with clients, there’s a good chance you offer professional advice or services. For example, if you own a marketing agency you may shape your client’s marketing strategy. Or if you’re a financial advisor you may advise on tax decisions.
During a recent project, you gave some advice that hasn’t worked out well for your client, and it loses them money. They’re not happy and take you to court for damages. Professional indemnity insurance for ltd companies could help to pay compensation and legal costs.
An employee injury
You always want to do the best for your employees, but accidents can happen. Say one of your employees is working in your shop’s storeroom, and they fall from one of the shelves. Or you own a cleaning business, and someone has an accident with chemicals.
Employers’ liability insurance is a legal requirement for anyone who employs staff. It can help to cover compensation and legal costs if your employee submits a claim over a work-related injury or illness.
An injured passer-by
Not every limited company operates from a single location. If you’re a construction or events business, you’ll be working from public places. This might be a busy venue or commercial high street.
When a passer-by trips over your kit, they break an ankle and need medical treatment and time off work. Luckily, your limited company’s public liability insurance could help to pay legal fees and damages. PL cover is designed for businesses that work around members of the public.
What insurance is available for limited companies?
Employers' liability insurance
If your limited business employs staff, employers’ liability insurance can help to cover you if work impacts an employee’s health. Whether you work in an office or a warehouse, or on a construction site, health hazards and accidents are a risk.
If your employee suffers an injury or falls ill due to the work they carry out, they may make a claim against your business. Employers’ liability insurance can help cover the cost of compensation. You may be required to have this insurance by law (external link) – even if your staff members are temporary or casual employees.
Public liability insurance
Public liability can be added to your limited company’s insurance policy to lend a hand if a member of the public makes a claim against you. If you work around people, for example as a builder or in events planning, PL can protect against potential risks.
Say someone suffers an injury passing by your building site. Or a customer falls on a wet floor in your shop. Public liability insurance can help pay compensation and legal costs.
Professional indemnity insurance
As a limited business, your reputation is everything. Say a client claims you’ve given poor professional advice that’s led to losses or damage to them. This could harm your reputation – and cost you money. The same if you provide negligent services.
Professional indemnity insurance can provide cover if you’re taken to court over this. We can help you with the legal fees and compensation costs. So, you can keep your business running.
Whatever your industry, there are always further risks to consider. If you work from registered premises, commercial property insurance could help. Meanwhile, cyber and data insurance can protect against digital threats.
Insurance for limited companies: FAQs
Do you need to have public liability insurance as a limited company?
It’s not a legal requirement to have public liability insurance as a limited company. However, it may be beneficial if your business operations engage with the public in any way. For example, if you own a shop, organise events or invite members of the public to your workplace.
Even if your contact with people outside your business isn’t regular, your business may still face public liability risks. For instance, if you run an online shop from home, a courier could trip on your doorstep while carrying a heavy batch of items. Insurance can help you to work with confidence from day one.
What insurances do I need for a limited company?
If you employ staff at your limited company, employers’ liability insurance is usually required by law (external link). Professional indemnity insurance is not required by law. But some professional bodies may require their members to have it. For example, solicitors, accountants, financial advisors, and others who may offer professional advice.
What does it mean to be a limited company?
A limited company (external link) is a business that is defined as being legally and financially separate from its owner. Usually, a shareholder or member’s liability is limited by the amount they have invested in the business.
Related articles and guides
Do I need employers' liability?
Discover whether your limited business needs employers’ liability and how it can benefit you and your company.
How much does public liability cost?
Learn how much public liability insurance costs depending on the type of limited company you run, and how to apply.
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