Is business insurance compulsory?

No, Swedish law does not require a company to have business insurance. There are exceptions, such as third-party cover for vehicles on the road and liability insurance in certain regulated professions. In practice, though, clients, landlords and lenders often require the company to be insured, and without insurance the company pays for any damage itself.

What does the law say?

No law says a company must have business insurance. But there are exceptions where insurance is compulsory. The most common are:

• Vehicles on the road. Every vehicle used on the road must have trafikförsäkring, the third-party motor cover, including company cars. Read more about motor insurance.
• Certain professions. In some regulated professions, liability insurance is a condition for being allowed to practise, for example for estate agents, auditors and insurance intermediaries.

Individual industries have further special requirements, such as patient insurance for anyone providing health care. If you are unsure what applies to your business, ask your trade association or an insurance adviser.

The requirements that come from others

In practice it is often someone other than the law that requires insurance:

• Clients often write into the contract that the supplier must have liability insurance. On consulting assignments this usually means professional indemnity. Read more about insurance for consultants.
• Landlords can require tenants to insure their property and their liability on the premises.
• Lenders and leasing companies often require whatever they finance to be insured.
• Public procurements often make insurance a condition for submitting a bid.

So a company without insurance can miss out on work, even though no law requires it.

Example: The job that needed a certificate of insurance. A newly started consultancy wins its first big assignment. The contract says the supplier must have liability insurance for a set amount and show a certificate of insurance before the work starts. The firm has no insurance and has to get some within a few days so as not to lose the job.

What happens if something goes wrong without insurance?

Then the company pays the whole cost itself, whether it is a fire on the premises, stolen stock or a claim for damages from a client. For a limited company, a large loss can threaten the whole business. As a sole trader there is no line between the company's finances and your own, so you can be personally liable to pay.

So the question is rarely whether the company needs insurance, but which cover is reasonable for your particular business. The guide on what business insurance includes is a good place to start.

Frequently asked questions

Does my home insurance cover the business?

Usually not. Home insurance is designed for private life and normally excludes property and liability connected with running a business. If you run the business from home, check what applies.

Does a limited company with no employees need insurance?

There is no legal requirement, but the company can still injure someone or lose its property. Clients also often require insurance. The need depends more on what the company does than on how many people work there.