Many founders starting a business are uncertain about what insurance they are legally required to hold and what they should hold out of commercial prudence. The answer depends on your business structure, the nature of your work, whether you have employees, and the requirements of your clients and any contracts you sign.
Some forms of business insurance are legally required: employer's liability insurance is compulsory for most businesses with employees, and certain regulated professions must hold specific cover by law or by their professional body. Beyond these requirements, insurance such as public liability and professional indemnity is effectively mandatory in practice for businesses that work with the public, visit client premises, or provide advice and professional services — even where the law does not require it.
The right combination of insurance depends on what you do, how you do it, and who you work with. A home-based sole trader with no employees and no client-facing work has very different needs from a limited company with staff in a regulated sector. Our guide to business insurance for UK founders helps you identify which policies are relevant and how to think about the cover you need.