Me and my brother have a limited company, with 1 angel investor. We sell software we have written ourselves, mainly to individuals but we will be looking at educational institutions soon. Our refund request rate is around half a percent if that makes any difference.
The software doesn't handle money in any way, and it's not a service (it's a game development program).
We run it currently from home, but eventually want offices but that will probably be 8-12 months away. The registered business address is a forwarding address.
How important is business insurance for us?
If you are in the UK (which you appear to be) and have a limited company it is a legal requirement to have Employer's liability insurance.
http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1074301641&type=RESOURCES It is not a very expensive thing for a small company though.
The comment really speaks to the issue. Insurance is usually purchased under two conditions in a business:
1) You're forced to do it by a third party (as part of a license agreement, condition of service, landlord, etc).
2) You have a risk that you are trying to mitigate through monetary means (business interruption insurance, fire, property insurance, liability insurance, etc).
Until you rent space somewhere, you likely do not need insurance at all, and may find it difficult to obtain for certain types of coverage due to mixed-use space issues.
Once you have an office, you might consider the standard bundle of property insurance and liability insurance, especially if you grow to have employees on site. Likely your landlord will have some requirements for insurance coverage.
It seems unlikely you'll need to have product liability insurance, though if there is any possibility that your software can induce seizures (bright flashes, etc), then you might consider it.
You do not need to worry about business insurance until you actually have an office or you are worried about clients suing you due to bugs, servers going down or billing issues. If you start getting educational contracts, they may have insurance requirements for your company. Make sure that you read over the contracts carefully and have the proper insurance.
Also, once you get an office, you will need general liability insurance to protect your business from someone getting injured in your office.