Insurance as your firm grows

Most businesses buy insurance once, properly, at the start — and then renew it. The policy gets bigger numbers each year, but it stays the policy of the company you were, not the one you are becoming. The businesses that get caught out are rarely careless; they simply crossed a growth threshold without noticing that it was an insurance event. This page maps the triggers. If you recognise your firm in more than one of them, your cover is due a conversation, whatever the renewal date says.

Your first employees

The first hire is the one trigger with the force of law behind it. Once you employ someone, employers’ liability insurance is a legal requirement under the Employers’ Liability (Compulsory Insurance) Act, and the requirement reaches further than founders expect — part-timers, temps and, in many arrangements, labour-only subcontractors can all count as employees. It is also the moment your other policies need re-reading: professional indemnity that covered one person’s judgement is now covering work you did not personally do, and underwriters start asking about supervision and sign-off.

Your first big contract

The first contract that specifies an insurance limit is the moment you stop choosing your own cover. A client’s £5m PI requirement arrives without regard to the £1m you carry, and the gap has to be closed before signature — warranting insurance you do not hold is a poor start to an engagement. Collateral warranties reach further still, extending duties to funders, purchasers and tenants for years, usually with an obligation to maintain cover throughout. We look at the insurance clauses before you sign; there is more in what changes about PI as your firm grows.

Taking investment

Investors bring their own insurance agenda. Term sheets and subscription agreements routinely require directors’ and officers’ cover before completion — the new board members will not take their seats without it — and diligence will probe PI, cyber and key-person arrangements. It is far cheaper to arrange this cover deliberately, ahead of the round, than in the final week before completion. We have set out the detail in the insurance your investors will ask for and our guide to insurance at Series A.

Opening a second site

A second site is more than an address to add to the schedule. Business interruption is the cover that quietly breaks: sums insured and indemnity periods set for one site rarely reflect how the two now depend on each other — if one location feeds the other, damage at either can stop both. Property values, stock in transit between sites and employers’ liability across locations all need re-basing, and a mid-term move is usually notifiable in any case. Tell your broker before the lease is signed, not after the fit-out.

Hiring abroad and overseas clients

The first overseas hire or client raises questions a domestic policy has never had to answer: whether your liability covers apply in that jurisdiction, whose courts a dispute lands in, whether local law requires locally admitted cover, and whether US or Canadian exposure — which most UK wordings treat very differently — is now in play. None of this is a reason not to expand; all of it is cheaper to resolve before the contract or the employment starts than after.

Acquiring a business

Buying a business means inheriting its past as well as its future. Claims arising from work the acquired firm did before completion need run-off cover for the old book, and the two firms’ live policies need merging without gaps in cover or doubled premium. We have been through this ourselves in acquiring the Solar Protect book, so the advice comes from the buying side of the table as well as the broking side. Raise insurance during due diligence, not at completion.

Outgrowing online policies

Somewhere in a firm’s growth, the online, form-driven policy stops fitting — the forms cap headcount and fee income, and before that the deeper problem appears: your work no longer matches the tick-box description of your trade. Mixed disciplines, novel services, design responsibility — the form has no box, so something approximate gets ticked, and approximate answers are where claims disputes start. That is the point to move to a broked placement; see outgrowing your online PI policy.

When programmes get layered

Past a certain size — usually when mandated limits climb and a single insurer will no longer write the whole line — cover stops being a policy and becomes a programme: a primary layer with excess layers above it, sometimes different insurers at each level, and wordings that have to follow form. That structure needs designing, not renewing. See PI programme design for larger firms for how we build it.

The habit that prevents all of this

Every trigger on this page has the same fix: cover reviewed at the growth stage, not just at renewal. Our clients tell us when they are hiring, bidding, raising or buying — usually one phone call — and we tell them what, if anything, it means for the insurance. Most calls end with “nothing to change yet”. The ones that don’t are the reason to make the call. We cannot promise every risk is placeable, but we can usually find a market — and finding it before you are committed is the whole game.

Common questions

How often should a growing firm review its insurance?

At every growth trigger, not on a calendar. Hiring, a big contract, investment, a new site, overseas work or an acquisition each justify a call to your broker at the time — renewal is a backstop, not the review.

Do I have to wait until renewal to change cover?

No. Limits can be increased, covers added and policies rewritten mid-term. Insurers deal with mid-term adjustments constantly; what they dislike is hearing about a change after the event.

Will telling my broker about growth put my premium up?

Sometimes, because there is genuinely more to insure — but the alternative is paying for cover that no longer matches the business, which is the expensive option if you ever claim. Many growth conversations end with no change at all.

We bought our policies online when we started. Is that a problem?

Not at the start — online policies fit small, simple risks well. The problem is outgrowing one without noticing: once headcount, fee income or the nature of your work drifts past what the form described, the cover needs re-placing. A broker can review what you have without obligation.

Apex Insurance Brokers Limited is authorised and regulated by the Financial Conduct Authority (FRN 724952). This page is general information, not advice on a specific policy.