Insurance

[tomd]

Our company will have two directors, who do not draw salaries. Do they count as employees from the point of view of requiring Employee Liability insurance?

A second question relates to professional indemnity insurance. This is relatively expensive (for a startup with little money). We will be selling a software product, online - is this type of insurance likely to be useful, and what factors should we take into account when deciding how much to take?

 

[TheGuru2010]

Our company will have two directors, who do not draw salaries. Do they count as employees from the point of view of requiring Employee Liability insurance?

A second question relates to professional indemnity insurance. This is relatively expensive (for a startup with little money). We will be selling a software product, online - is this type of insurance likely to be useful, and what factors should we take into account when deciding how much to take?

Hi Tom,

This does really all depend on the details of the business a bit further, Do you have any set contracts in place at the moment?

If you would like a chat drop me some contact details.

Thanks

 

[TheGuru2010]

Maybe this link could help?

http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1074301641&type=RESOURCES

 

[stevenricherd]

Hi Tom,
You can take the insurance cover for the products as well, when it comes to online business, the main risk is regarding the software product.

 

[Simply Business]

Hello Tomd,

I work for a business insurance broker so I thought I would give you a brief overview of employers liabilty, professional indemnity and products liability.

As any insurer would be covering the limited company as it is the legal entity - both directors will be classed as employees. It is a legal requirement that if there are any employees that they are covered by employers liability insurance. Regardless of the directors relationship - in theory - if one of them got injured whilst working for the company they are legally entitled to sue the company. This is where employers liability kicks in.

Professional indemnity (PI) is designed to protect you against errors, omissions or neglect with regards to advice, designs or plans your business puts forward that lead to an injury or financial loss to your client. So depending on the intended function of the product you sell - PI may apply but it sounds more like product liability would be best if you are selling a physical product.

If you have any queries or questions please feel free to get in touch via
http://www.simplybusiness.co.uk/social/online-customer-support

Kind Regards

Tim

 

[TheGuru2010]

Just to clear this up, if you are a limited company the only way that employers liability would not be required is if there was only director & that director has to own more than 50% of the holdings.

So if you are a husband & wife (both directors) then you will need employers liability cover

 

[Saxon Heights]

This will tell you if you need EL: http://www.hse.gov.uk/pubns/hse40.pdf

 

[internetspaceships]

As far as the product liability is concerned. You need to determine if you are giving advice, or whether you are literally taking orders for a product.

The other key issue is whether you are selling a product that you have designed and built or whether you are reselling someone else's product.

 

[tony84]

I think you could get away without insurance for employee liability as you would technically just be suing yourself?

As for PI i dont know enough about it to comment.

One other thing you may not have thought about is Income Protection - you say your not taking a wage, is this because your taking dividends or because its not earning enough? If its the latter you can probably ignore this, but should one of you be able to work, im sure the other person would not be happy doing 2 peoples work for just their wage. Income Protection can cover your wage on the basis you are unable to work. - If your interested give me a shout.

 

[Saxon Heights]

I think you could get away without insurance for employee liability as you would technically just be suing yourself?

As for PI i dont know enough about it to comment.

One other thing you may not have thought about is Income Protection - you say your not taking a wage, is this because your taking dividends or because its not earning enough? If its the latter you can probably ignore this, but should one of you be able to work, im sure the other person would not be happy doing 2 peoples work for just their wage. Income Protection can cover your wage on the basis you are unable to work. - If your interested give me a shout.

You can be fined for not having EL if you should have it. The fine is up to £2500 PER DAY.

I don't really sell EL, but if you need to get it you should.

 

[TheGuru2010]

You must take Employers Liability if you have to ITS REQUIRED BY LAW - The cost can be minimal if its just directors etc, to dismiss this & give advice stating "you could get away with it" is just silly!!!

 

[lockyer]

I think you could get away without insurance for employee liability as you would technically just be suing yourself?

This has got to be the worst piece of advice I have ever seen on this forum. The EL premium on non manual director would struggle to breach £50.

Is it worth risking the fine for that?

 

[Flower3200]

If you would like a FREE business Insurance Health Check I know a company who will do this to make sure you have the cover you need in place. call 07753822623

 

[TheGuru2010]

If you would like a FREE business Insurance Health Check I know a company who will do this to make sure you have the cover you need in place. call 07753822623

Is this not the number for a mortgage advisor?

 

[Flower3200]

You are correct Mortgage & General Insurance Adviser...re-read my post and you will note I mention I know of a company who will provide the free service.

I do not personally provide this Free Service.

Is this a suitable answer to your vague question?

 

[insurancebloke]

Lockyer is 100% right there is some terrible advice here. The position in relation to the original question is:

1. You need Employers liability insurance if you are a sole director or any other sort of director of a limited company. No argument and don't try to avoid this as the penalties are severe.

2. Professional Indemnity (PI) is almost certainly a no-brainer for anyone selling software UNLESS the manufatcurers of the software are providing your business with an indemnity under any contract (which would be a first!). If you are developing/writing/coding or otherwise adapting software to sell then I would suggest this is an essential purchase.

PI will cover you against actions taken against your company if the service you provide results in them suffering financial loss. If your supplied software damages their system, is responsible for a virus or any similar incident that requires the customer to either spend money putting it right or suffers financial losses as a result of loss of reputation or inability to trade then they are coming for you for compensation. The biggest benefit with PI cover is the legal expenses that the insurer will pay to defend the claim if it thinks it is sensible to do this.

You will also need public liabilty and potentially products liability too depending on what your business does.

Best advice? Go and see a good local broker and sit down with him/her and discuss your business. It will pay you handsomely in the end. If you are close to Lockyer then that's a good place to start.