When you run a company it is wise and in some cases mandatory to take out certain levels insurance.
The most common insurances a company pays for are as follows:
Public liability - Protection from claims for damage to property or injuries caused by you or one of your employees to others.
Professional indemnity - Protects the business in the event that your specialist advice provided via the company was negligent or misleading and resulted in losses for the client.
Employers' liability - Covers the company in the event of an injury or even death to an employee working on company business. You must have this insurance unless you are a sole employee who owns at least half of the share capital (in most contractors cases).
Tax investigation - Will ensure the costs of professional representation are covered in the event HMRC decide to investigate your tax affairs.
Other premiums such as vehicle, office and key man insurance.
What's not included
Any personal or medical insurances should be picked up via the correct employee benefit category.
How is it taxed?
The cost of an insurance premiums is a business deduction and will reduce your net taxable profit.
Insurance transactions are exempt from VAT.
Care should be taken to not confuse insurance premium tax (IPT) with VAT. Unlike VAT IPT cannot be recovered so make sure to mark any insurance premium transactions as exempt.
From an accounting perspective, make sure that insurance premiums yet to expire are reported in prepayments as a current asset. For example if you pay your premium up front for the year, you'll only need to report the amount you have used for that period when lodging your return.