A Concise Guide to Limited Company Insurance

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A Concise Guide to Limited Company Insurance

Over the lifetime of a business, there are a number of potential issues that a typical limited company owner may encounter. Therefore, it will come as no surprise that insurance companies offer a wide variety of different policies to cover any eventuality.

Some types of insurance may be mandatory, but most aren’t. In fact, to fulfill the terms of a contract with a client or supplier, then you might have to pay for certain types of cover (such as professional indemnity insurance if you are a professional consultant or an accountant).

In this guide, we’re going to take a look at the most common limited company insurance requirements:

1. Public Liability Insurance

A Public Liability policy is put in place to protect your limited company from any claims for damage to property or injuries caused by your or your employees to others whilst on company business.

Examples of when you may be covered by this type of insurance include:

  • If you are an engineer and you accidentally short-circuit a customer’s web server, while carrying out maintenance, resulting in thousands of pounds worth of damage to the client’s equipment.
  • If you are an architect and you leave your surveying equipment unattended and someone trips over it and you are then sued for the damages.
  • If you are a plumber and you fail to fit piping securely, causing water to leak into the offices below, consequently damaging the fixtures and fittings.
  • A customer visiting your premises places an order and then burns themselves on a poorly guarded heater, injuring themselves.

Public liability insurance will cover your legal costs (including the claimant’s costs if you’re found to be at fault), damages, and loss of earnings.

However, it is not mandatory to be covered by Public Liability insurance.

2. Employers’ Liability Insurance

AN EL policy will cover you in the event that an injury or death occurs whilst an employee is working on company business. 

Under The Employers’ Liability Act 1969, all businesses are required to have Employers’ liability insurance in place (of at least £5m), although there are some exceptions:

  • Limited companies with a sole employee who owns at least half the share capital, are exempt.
  • If you are self-employed, and the sole employee, or employ just close family members, you are also exempt.

The Health & Safety Executive enforces the EL insurance cover, who then have the power to give hefty fines to businesses that are not covered.

Employers’ liability insurance will cover your legal costs for defending a claim, along with the costs of damages and compensation.

3. Professional Indemnity Insurance

If your company provides specialist advice, then Professional Indemnity insurance will protect you if a present or past customer claims negligence, dishonesty, or damage to documents, or similar. In some ‘knowledge’ industries, PI insurance is very common and may even be required by some clients.

4. Tax Investigation Insurance

Tax Investigation insurance will cover the costs of professional representation if HMRC decides to investigate your tax affairs. Depending on the cover, you may even be able to cover the amount of extra tax you are subsequently found to be liable for following the investigation. This type of policy can cost less than £150 per year and is very worthwhile since a lot of limited company directors tend to worry about their financial situation more than anything else.

5. Other Types of Insurance

Other common policies that limited company owners may opt for include vehicle insurance, property and contents insurance, director’s insurance, office equipment insurance, and key man insurance.  

Leading business insurance providers will be able to provide cover for almost any eventuality.

And that’s about it! We hope you have now learnt more about the different types of limited company insurance and that it will be useful on your business journey. We wish you the best of luck with your company!

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