When setting up a new business, there are a whole range of questions you will ask youself. Many of these are associated with whether you need to do or buy something and whether the business can afford the cost.
One of these, which will more than likely be at the top of your list, is the requirement for business insurance. Surely, if you do not legally need to have this cover in place, then why should you do this?
The first thing we need to do is to consider whether it is an absolute requirement. Each country around the world has different laws, rules and regulations. In the UK, one of the many laws associated with business, is that if you employ anyone, even if part-time, receiving dividends only or even voluntary, you need to have employers liability insurance in force. This needs to be through an approved insurer, and the minimum limit of indemnity, or level of cover, is £5,000,000 any one claim.
As well as employers liability, you will need to have motor insurance in force, if you own, operate, hire or lease business cars or vans.
Apart from these two main cover types, to answer the posed question, no you do not legally require cover.
There is always a but though, and today’s one cover two points. Firstly, you need to consider whether you can afford to trade without, for example, pub insurance? What happens if someone slips on spilled bear, breaks their back and then six months later you get a solicitors letter demanding damages. You do not legally need cover for this, but without it your business could be ruined.
The second point relates to loans and mortgages. If you have received funding from any source, the chances are, within the terms and conditions, it will state that you will need to have insurance in place (including accidental damage). What you do not want is for the bank to pull the plug on your lending, because you do not have the proper cover in place.