Self Employed Insurance

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What our Nerds say about self employed insurance

Whether you’re self-employed, a sole trader or a freelancer, there are a number of situations where business insurance can come to the rescue for single-person operations.

To think you don’t need insurance because you’re self-employed is to leave yourself open to potential trouble down the road.

Regardless of your industry, human error is hard to avoid. Accidents, unfortunately, do happen. But that doesn’t mean you have to bear the full financial burden when they do.

Connor Campbell Lead Writer at NerdWallet

Our guide to self-employed insurance in the UK

What is self-employed insurance?

Being self-employed doesn’t just cover one profession, but a whole range of jobs and sectors. The same is true for self-employed insurance. It is an umbrella term for the collection of business insurance products you may want to consider to best protect you and your organisation.

You likely won’t need every type of insurance that falls under the self-employed insurance banner. You know best the risks associated with your business, and which products are most applicable to your situation.

Why is self-employed insurance important?

If as a self-employed person you don’t have insurance, you are leaving yourself at risk of paying 100% of the legal fees and compensation costs if a claim is made against your business.

You may also fall foul of the rules of your regulatory body if you don’t have professional indemnity insurance despite it being a condition of your membership, or get in legal trouble if you don’t have employers’ liability insurance but do have staff.

What business insurance policies do I need if I’m self-employed?

If you employ anyone that isn’t a UK-based family member you are legally required to have employers’ liability insurance. Meanwhile, some regulatory bodies may insist you have professional indemnity insurance as a condition of membership.

And, if your business involves driving a car or vehicle, you may need business car insurance or commercial vehicle insurance.

Other than that, which policies you take out will be determined by the risks faced by your business, and how well covered you want to be.

Do I need public liability insurance?

Public liability insurance is one of the more common forms of business insurance. It covers the legal fees and compensation costs of a claim made against your business in the event of personal injury or death, or property loss or damage, that results from your business activities.

If your business is public-facing in any way – from clients and customers, to strangers walking past your worksite – it may be worth considering public liability insurance.

And while it isn’t a legal necessity, some contracts you sign, or trade associations you belong to, may require you to take it out.

What if I work from home?

As a sole trader, or someone who is self-employed and running their own company, there is a chance that you will be working from home.

If that is the case, then you may want to take out home business insurance. Many providers will often group together a number of different policies, such as office insurance, public liability insurance and professional indemnity insurance, under the banner of home business insurance.

You may also need to update your residential home insurance policy to inform your insurer that you are working from home. This is especially true if you have business visitors to your property.

Types of self-employed insurance

Even if you are a sole trader working entirely on your own, there are numerous types of business insurance that you should consider in order to protect yourself from a series of worst-case scenarios.

» COMPARE: Business insurance

Professional indemnity insurance

To a certain extent, you may not have a choice when it comes to professional indemnity insurance.

Although it is not a legal necessity, many institutions, associations and regulatory bodies you may wish to join as a sole trader require professional indemnity insurance as a condition of your membership. Sometimes it may even be your client who is insisting that you have this type of cover before they hire you.

Professional indemnity insurance covers a wide range of sectors, from those providing advice – such as accountants, consultants and solicitors – to jobs involving specifications, such as architects, interior designers and web developers or designers.

It would typically be applied in situations where, as a result of your actions or recommendations, you have caused a financial loss for a client, or if your services have been deemed inadequate.

For example, if in the process of designing a website you accidentally use images that are not your intellectual property, professional indemnity insurance would cover your costs if you are sued.

Similarly, if you make an error as a freelance accountant, this kind of policy would take care of your legal fees and compensation costs.

» COMPARE: Professional indemnity insurance

Public liability insurance

Public liability insurance for self-employed workers covers the legal costs and compensation claims for personal injury or death, and property loss or damage, caused by your business activities. With this kind of insurance, the claims would typically be made by a client, visitor to your workplace, or a member of the general public.

For example, if you are a plumber, and a pipe you installed bursts due to it not being fitted properly, public liability insurance would cover you if you were sued for negligence.

It can even be helpful if you are a live performer, such as a DJ. Say the venue is damaged during your performance, or someone is injured in an accident. A public liability insurance policy would prevent you from having to pay any compensation costs out of your own pocket.

» COMPARE: Public liability insurance for sole traders

Product liability insurance

If you operate a bakery business at weekend food markets, or make money from selling your creations on online marketplaces such as Etsy, you might want to look into product liability insurance for sole traders.

An honest mistake can still lead to claims against your business if an item or product you sell causes injury or property damage. And it doesn’t matter whether you were the manufacturer of the item or not as this cover even includes items you give away for free.

There are a variety of situations in which product liability insurance can come to the rescue of a sole trader dealing in goods.

This could be someone getting food poisoning from a batch of cookies, an allergic reaction caused by a mislabelled product, or a cut hand from a jagged piece of packaging, for example.

» COMPARE: Craft insurance

Employers’ liability insurance

If you do not have any employees, you do not need employers’ liability insurance. It’s as simple as that.

However, the moment you hire just one employee, it is a legal requirement in the UK to take out an employers’ liability insurance policy with coverage of at least £5 million from an authorised insurer. You will also need this cover if you are a limited company with any shareholder owning less than a 50% stake in the business. So for example, if you are two sole traders owning a 60:40 share of a business.

Employers’ liability insurance is designed to cover compensation costs and legal fees if an employee becomes ill or injured while carrying the work they do for you.

You may not need it if you run a business that only employs members of your own family or are employing someone who is based abroad.

So, for example, if you are a freelance writer, or an independent plumber working on your own, you would not need to take out this kind of policy.

On the other hand, if you are an electrician with a paid apprentice, or a food truck owner with a team of cooks, you would need employers’ liability insurance.

» COMPARE: Employers’ liability insurance

Other types of insurance to consider if you are self-employed

Business car insurance

While you must have car insurance as standard to drive in the UK, you will need to take out a specific business car insurance policy if your job involves you doing more than just commuting to and from your workplace.

For example, this could be a builder driving to multiple sites, a salesperson going from client to client, or even running work errands during the day.

Of course, there are also jobs where a vehicle is a primary part of your work, for example if you drive a van or a taxi. These would need their own commercial car or vehicle insurance policies.

» COMPARE: Car insurance

Courier insurance

As a self-employed courier delivering food or goods for a living, there are two main forms of insurance to consider.

The first is hire and reward insurance, which is a legal necessity if you are carrying other people’s goods, or paying passengers of any kind.

The second is goods in transit insurance. This will cover the cost of replacing the goods you are delivering if they are lost, stolen or damaged.

» MORE: Do you need business insurance to deliver food?

Tool insurance

There are many professions where tools are vital to their trade, such as carpenters, builders and plumbers.

But tool insurance doesn’t only provide cover for the accidental loss, theft or damage of ‘traditional’ tools, such as wrenches, saws and screwdrivers. It also includes modern devices, such as mobile phones and laptops, although such items may sometimes fall under business equipment insurance.

So if your work requires an item that you simply cannot do without, you should look into tool insurance.

» COMPARE: Tradesman insurance

Business contents insurance

In order to financially cover the damage to, theft or loss of your stock, equipment, and even documents, you may want to look into business contents insurance. It can also include cover for fixtures and fittings, and employees’ personal belongings.

This kind of insurance is applicable to a range of different professions, from beauty therapists running their own salons to accountants working from home.

Business equipment insurance

While there is overlap between business contents insurance and business equipment insurance, the latter is sometimes more suitable for items such as laptops, mobile phones, and machinery, whether that’s own-plant or hired-in plant.

A good policy should cover you if your equipment is lost, damaged or stolen.

Commercial property insurance

If you want to protect the bricks and mortar of your business premises, then you may want to consider commercial property insurance. This can include cover for repairing damage caused by fires, flooding, riots, storms and burst pipes.

Cyber insurance

In order to protect your business from digital threats, you may want to look into cyber insurance.

Cyber insurance can help cover costs related to the loss of or damage to digital assets, cyber exhortation, and data breaches and the subsequent impact on the reputation of you, your business, or a client.

Business interruption insurance

If an event, such as a flood, fire or breakdown of essential equipment, prevents you from carrying out business as usual, then business interruption insurance may help cover the loss of your pre-tax profits, or increased costs related to the running of your business.

Personal accident insurance

It isn’t only clients or members of the public who can get injured during your working day.

Dedicated personal accident insurance – separate to a life insurance policy or private healthcare insurance – can help if you were to be injured either at work or elsewhere to the extent that you could no longer earn an income.

How does self-employed insurance work?

What is covered by your self-employed insurance policy depends on which products you decide to include when you take it out. This then also determines which incidents and unforeseen events you can make a claim about.

If your claim is successful, your self-employed insurance policy will help cover:

  • the legal feels associated with your claim
  • the compensation costs associated with your claim

How much does self-employed insurance cost?

Since what is included in a self-employed insurance policy can vary greatly, so too does the cost. To work out how much you’ll pay for your policy, insurers will likely want to know:

  • how many products are included in your policy
  • the level of cover you want
  • what type of work you undertake
  • how long you have been in business
  • whether you have made any previous claims

Factors that could influence my insurance costs

As mentioned, there are a number of factors that can cause the overall cost of your self-employed insurance policy to rise or fall.

Level of cover

How many products you include in your self-employed insurance policy, and the level of cover you want from those products, will play a large part in dictating the overall cost of your insurance.

Industry

Different industries are exposed to different risks, risks that can come with vastly different costs. The chance of injury, for example, is likely higher at a construction site than it is for a freelancer who works at home. That is why what your business does will affect how much you pay for your self-employed insurance.

Business size

The bigger your business, in terms of employees, the more expensive your insurance policy is likely to be. This is because there are more people to potentially cause a claim to arise.

Business turnover

As with your number of employees, the larger your business’s turnover, the higher your premium may be, as the chances of a more expensive claim made against you are increased.

Business location

If your business is located on a busy high street, with strong footfall, the chances of something going wrong are arguably greater than if you are based at home, or in a more rural area. This is why your business location can affect your premium.

Claims history

When applying for insurance as someone who is self-employed, you will have to declare to the insurer if your business has made any past claims. If it has, this can push up the price of your premium, depending on the size of the claim.

Can I add extra cover mid-way through my insurance policy?

Your business isn’t static. You may add new services or products, use new equipment, or move to different premises that all could require an update to your self-employed insurance mid-way through your policy.

If this is the case, you should contact your insurer at the earliest opportunity, to make sure you have proper cover in place ahead of time.

How do self-employed business insurance claims work?

Whether you are making a claim, or fear a claim might be made against you, there are a few general steps you should follow:

  1. Check your coverage. Before you make a claim, it is best to remind yourself of exactly what is covered by your policy.
  2. Let your insurer know. It is best to inform your insurer that you are making a claim, or that a claim is potentially going to be made against you, as soon as you can.
  3. Get together your evidence. Your insurer won’t take your claim at face value. You will need to provide evidence the claim is valid, such as photos of damage, receipts of costs, or witness statements.
  4. Submit your paperwork. Your insurer will likely send you a claims form to fill in. To help your claim run as smoothly as possible, make sure you are thorough and comprehensive when filling it out, and provide everything that is required of you as quickly as you can. This includes making sure you are claiming for the right amount.

How to get business insurance if I’m self-employed

Before getting a self-employed insurance package, it is best to take stock of what risks your specific business is exposed to, and what kind of cover you might need. This will help ensure that you purchase a self-employed insurance package that gives you the right level of protection, for the right price.

Once you are ready to secure your self-employed insurance policy, you can click ‘get a quote’ to find cover in just 10 minutes.

Can I get business insurance if I’ve had a CCJ or IVA?

While having a county court judgment (CCJ) or individual voluntary agreement (IVA) won’t necessarily prevent you from getting insurance as someone who is self-employed, it may limit the range of insurers you can choose from. This is because each insurer treats CCJs and IVAs differently.

Why should I compare self-employed insurance?

As a self-employed business person, you want what is best for your business. When it comes to insurance, that could mean a cheaper policy, more thorough coverage, or better service.

That is why it is important to compare self-employed insurance policies before deciding which one to go for. It means you can feel confident that you have made the right choice for your business, having taken full stock of what is on offer.

FAQs For Self-Employed Insurance

Do I need public liability insurance if I’m self-employed?

It isn’t a legal requirement to have public liability insurance if you are self-employed. However, if you come into contact with the ‘public’ in any form – that includes clients, visitors and customers – it is recommended that you consider taking out cover.

Accidents are sometimes unavoidable, and public liability insurance can help with the legal fees and compensation costs if something were to go wrong.

Is self-employed insurance expensive?

The overall cost of self-employed insurance can vary greatly, depending on the industry, business size, location, and the level of cover required.

This means it can be hard to state whether or not it is expensive. Industries that have more severe risks attached to them, such as the prospect of physical injury on a construction site, or the chance of a costly financial error at an accountants, may end up paying more for their premium than other, ‘less risky’ professions.

About the author

Connor Campbell
Connor is a writer and spokesperson for NerdWallet. Previously at Spreadex, his market commentary has been quoted in the likes of the BBC, The Guardian, Evening Standard, Reuters and The Independent. Read more
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