Starting a limited company: the insurance you should consider

The start of a new year can often feel like a good time to put your ideas of launching a new business into motion.

After many hours spent on the planning phase, your business plan is ready for launch and your aspirations of becoming self-employed are finally ready to become reality.

In this article, Markel Direct explain the types of business insurance that are most often considered essential for start-ups and how they can help to protect your business.

Limited company contractor working from home

Why do startups need business insurance?

A common mistake made by new limited companies is to have no business insurance in place when they begin working with a client.

Insuring your new business for millions of pounds against potential claims may seem excessive. Some start-ups may plan to look into business insurance once their company is a little more established, however startups specifically are at risk. A claim made against you, no matter how small, during a period where your business likely has little reserves, could lead to financial disaster for your business before it’s even got going. As well as this, often clients will request that you have insurance in place before giving you a contract.

There are a range of business insurance covers available for startups, that will cover your business if a project doesn’t quite go to plan. We will now look at each of these types of insurance and what they cover against.

Professional indemnity insurance

If an allegation or claim is made against you for providing poor or careless advice, professional indemnity insurance will cover you. If you were to make a mistake in your work, and that mistake caused issues such as a financial loss for your client, professional indemnity insurance would cover you.

For many freelancers, contractors and consultants, professional indemnity insurance will be needed to secure a contract or required to become a member of a professional body. It’s a good idea to check whether this is a requirement for you prior to arranging cover.

Public liability insurance

If during your business activities, you come into contact with members of the public, public liability insurance is often considered essential. This could include your clients coming to visit you or you going to your client’s premises to visit them.

If you accidently cause injury to a member of the public, for example if a client slips and breaks their arm while on your premises or if you cause damage to their property, for example, while at your client’s premises you knock a coffee over their laptop, public liability insurance will cover the legal costs of defending a claim made against you for the damage and cover any compensation costs owed to the client.

Employers’ liability insurance

If your company will need to hire staff, even if it’s just on a temporary or part time basis, employers’ liability insurance is a legal requirement. Employers must be covered for at least £5 million1. Employers’ liability insurance provides cover for your employees, if they make a claim because of an injury or illness they’ve sustained while carrying out their work activities under your employment.

Directors and officers liability insurance

If you’re going to be a director of your limited company, directors and officers insurance could be of great value. As a company director, you have an obligation to undertake your duties with reasonable skill and attention, and act in good faith in the company’s interests. If an issue occurs or you are believed to not be fulfilling your obligations, you could be held personally liable by shareholders or other individuals who have a financial interest in the company.

Director and officers liability insurance will defend you personally, as a director or officer, against claims of wrongful acts and will pay out any damages awarded against you. Without this insurance, if someone makes a claim against you, your defense and the cost of damages will likely be paid out of your own pocket.

Business equipment and office insurance

Whether you’ll be based from home or from an office, your electronic devices including laptop, mobile phone, tablet and other business equipment are at risk of being stolen, lost or irreparably damaged. For many self-employed professionals, having a device like your laptop stolen would stop you in your tracks from being able to work and earn money and if you’re work isn’t backed up, important documents could be lost. Not to mention the expense of having to replace the device.

If you own office premises, buildings and contents insurance can cover you against flood, fire, theft and other risks.

Business interruption insurance

If an unexpected incident occurs which stops you from being able to use your normal place of work, for example if there is a fire or flood at your office, business interruption insurance covers against loss of income and/or additional expenses acquired to continue trading.

Although you may think it seems unlikely to happen, something as simple as a leaking tap dripping through the ceiling can damage an office space and take weeks to repair. Many companies struggle to continue with business as usual after an unforeseen disaster.

Startup business insurance

As an IPSE member, you can enjoy a 15% discount* on business insurance from Markel Direct until 31st January 2022. Get a quote here.

Markel Direct can provide instant cover for your start up business over ten interest free instalments, helping you spread the cost while your new business grows.

1 https://www.gov.uk/employers-liability-insurance

*IPSE member discount terms and conditions
The 15% discount will be applied to the net policy premium before insurance premium tax is applied. All quotations provided will be subject to meeting underwriting and claims criteria acceptance. All cover will be subject to full policy terms and conditions which are available upon request. Offer is valid until 31st January 2022.

Markel Direct

IPSE have partnered with Markel Direct, a specialist insurer of contractors, freelancers, self-employed professionals and micro-businesses to offer a 10% discount* on contractor insurance to IPSE members.

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Insurance advice

Freelancer and contractor insurance is designed to protect you against the unforeseen. This guide, produced in partnership with Markel Direct, outlines the different types of insurance available.

Insurance Advice

Protect yourself

IPSE protects its members with a range of essential benefits, from tax investigation cover to illness an injury cover. You'll have peace of mind both in business and in life, knowing you are covered by IPSE.

Protect yourself

 

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