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  • Essential cover

    Protection if someone is injured or their property is damaged because of your business.

    • Public Liability Insurance
    • Employers Liability Insurance
    • Business Contents Insurance
  • Professional cover

    Legal fees and compensation payments if you make a mistake in your work and a client suffers a financial loss.

    • Professional Indemnity Insurance
  • Management cover

    Cover for legal fees and compensation payments if you make a mistake in your work and a client suffers a financial loss.

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What our Nerds say about self employed insurance

CONNOR

BUSINESS NERD

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.

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.

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

What insurance do I need if I’m self-employed or a sole trader?

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 with NerdWallet

Self-employed 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

Self-employed 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

Self-employed 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

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 insurance policies.

» COMPARE: Car insurance

Self-employed 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

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.

Do you need employers’ liability insurance if you are self-employed?

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.

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

How do I get self-employed insurance?

Before getting self-employed insurance, 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.

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

Self-employed Insurance FAQs

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.

What if I don’t have insurance as a sole trader?

If you don’t have insurance as a sole trader, 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.

Do I need business insurance 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.

About the author

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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