Limited company insurance: what’s required and what’s recommended?
When considering insurance, it helps to separate what’s legally required from what’s recommended based on how your business operates.
Here’s a quick breakdown of some of the most common insurance types:
Type of insurance | Is it legally required? | Who needs it? |
|---|
| | Businesses with employees |
| No, but often required by clients | Consultants, agencies, service-based businesses |
| No, but strongly recommended | Businesses interacting with clients or the public |
Directors’ & Officers’ (D&O) | | Limited company directors |
As you can see, there’s only one type of insurance that’s legally required. However, most limited companies will need more than that - especially when it comes to working with clients or operating in physical spaces.
Next, we’ll take a closer look at the key types of insurance and when they each make sense.
The legal must-have: Employers’ Liability (EL) insurance
If your limited company employs anyone (even just one person), you’re legally required to have Employers’ Liability (EL) insurance under the Employers’ Liability (Compulsory Insurance) Act 1969.
This cover protects your business if an employee becomes ill or is injured as a result of their work, and makes a claim against you.
You’ll need Employers’ Liability insurance if:
You employ full-time or part-time staff
You hire temporary workers or apprentices
You have interns or trainees working under your supervision
There are a few exceptions (for example, if you only employ certain family members), but most limited companies with staff will need this cover.
By law, you must:
Have at least £5 million of cover
Display your certificate of insurance (digitally or physically)
Have cover in place as soon as you become an employer
Failure to comply can result in fines of up to £2,500 per day.
Professional Indemnity insurance: protecting your expertise
If your business involves providing advice, services, or professional expertise, professional indemnity insurance provides an important layer of protection if something goes wrong.
It covers claims made by clients who believe that your work - whether that’s advice, designs, or services - has caused them financial loss.
Why it matters
Even if you do everything by the book, misunderstandings and mistakes can happen. Without cover, you could leave yourself exposed to legal costs and compensation claims.
And it’s not just about avoiding risk. Professional indemnity insurance also plays an important role in how your business is perceived. Many clients won’t sign a contract unless you’ve got cover in place.
Who needs professional indemnity insurance?
You’ll likely need this if:
You offer consulting, design, marketing, or accounting services
You provide advice that influences client decisions
You deliver work that could lead to financial loss if something goes wrong
Public Liability: covering everyday business risks
Public Liability insurance protects your business if a third party is injured or their property is damaged as a result of your business activities. This includes claims made by clients, customers, or members of the public.
This type of cover is especially important if you:
Meet clients in person
Work at client sites
Run a shop, studio, or office
Attend events, markets, or pop-ups
Even something as simple as a client tripping over a cable or slipping on a wet floor could result in a claim.
Why it’s worth considering
While not legally required, Public Liability insurance is often expected - especially if you work with commercial clients, landlords, or event organisers.
Directors’ and Officers’ (D&O) Insurance: protecting you personally
One of the key benefits of a limited company is limited liability: your personal assets are generally separate from the business. However, as a company director, you can still be held personally responsible for certain decisions or actions taken in your role.
Directors’ and Officers’ (D&O) insurance is designed to protect you in these situations.
What does it cover?
D&O insurance can help cover legal costs and claims related to:
Mismanagement or alleged wrongful decisions
Breaches of duty
Regulatory investigations
Claims from shareholders, employees, or third parties
For example, if a supplier claims that you made a decision that led to them suffering financial loss - such as terminating a contract without proper notice - they could take legal action against you personally as a director.
Or if an employee alleges unfair treatment or wrongful dismissal and names you directly in the claim, you may need to defend yourself as an individual, not just as a business owner.
Why it matters
As your business grows, so does your level of responsibility. D&O insurance provides an additional layer of protection, giving you peace of mind that your personal finances are not exposed if a claim is made against you.
How to choose the right insurance for your limited company
The right combination of cover will depend on how your business operates and how it’s likely to grow.
Before deciding, consider the following:
Do you employ (or plan to employ) staff? If yes, you’ll need Employers’ Liability insurance (as required by law).
Does your work involve giving advice or delivering services? If so, Professional Indemnity insurance can help protect you from client claims.
Do you interact with customers or the public in physical spaces? Public Liability insurance can cover accidents or damage.
Could a mistake or issue lead to financial loss for a client? This increases the importance of having professional cover in place.
Are you making decisions as a company director that could be challenged? If so, D&O insurance can help protect you personally.
You should also consider any contractual requirements. Some clients will specify minimum levels of cover (for example, £1m or £5m), which can influence your decision.
Considering these factors early on will help you build a level of protection that fits your business, without paying for cover you don’t need.
Manage your business insurance in one place with Tide
As your limited company grows, you need protection that can keep pace as your client base expands, your team evolves, and your level of risk increases.
At the same time, managing multiple policies shouldn’t add unnecessary complexity to your day-to-day. Keeping your insurance simple, organised, and easy to access is just as important as having the right cover in place.
With Tide business insurance, you can get the essential cover your company needs without the usual admin. From Employers’ Liability to Professional Indemnity, you can find the right policies, get a quote in minutes, and manage everything directly in the Tide app.
That means:
All your policies, documents, and payments in one place
No manual setup or paperwork
Flexible cover that scales with your business as it grows
You’ve built your business, now it’s time to protect it. Open a Tide account today and access the tools, insurance, and financial features you need to keep everything moving forward.
