Guide to Business Insurance for the Self-Employed

Guide to Business Insurance for the Self-Employed

There are so many reasons that you might want to work for yourself. For one thing, you manage your own time and business hours which can lead to a better work-life balance. Secondly, you don’t have to answer to anyone, you can choose who you work with, and finally, you can plan your own financial future.

On the other hand, when you choose to go self-employed, you also take full responsibility for everything that goes on within your business. You will also face additional challenges that you might not have had to deal with as an employed professional.

One such responsibility is making sure you have the right business insurance. This is something that many might not think about, particularly in the early stages of establishing your business. However, this is vital.

In this guide, we’re going to take a look at what business insurance means when you’re self-employed and the types of policies you might need to consider.

What is Business Insurance?

It can be tricky to define business insurance because this is an umbrella term for lots of different policies. However, in Layman’s terms, business insurance is coverage that protects businesses from losses that may occur as they go about their normal working day, whether a direct result of their actions or not.

For example, some types of business insurance policies will include property damage, liability insurance and protecting employees.

Does Every Business Need Insurance – Even Self-Employed Professionals?

Technically there is only one type of business insurance that is absolutely mandatory in the UK. This is employer liability insurance and is only relevant if you hire other people to work for you.

That being said, it’s likely that all businesses will need insurance in one way or another.

Of course, the type of policy you need will very much depend on the business, and there is no one size fits all approach. This is why it is so important to find out what types of policies you need specifically, especially when you’re self-employed.

Even though most cover might not be legally mandatory, it is still advised that you get insurance to protect yourself, your customers and your employees.

The Different Types of Business Insurance You Might Need to Consider

As we said, there are several policies you might need to consider when you’re self-employed. We’ll now look at these in more detail, discussing which professionals and which types of businesses should invest in the various different policies.

Business Insurance 

Why settle for several insurance policies to have them all in one coverage? Business or commercial insurance offers comprehensive coverage options, including public liability insurance, employer’s liability cover, professional indemnity insurance risks, and specific trade and equipment insurance. This insurance for your business can effectively address your unique challenges. You can select the coverage types and levels that best match your business’s specific risks and circumstances. 

But how can this comprehensive insurance protects you? Business insurance safeguards your company from significant financial losses due to unexpected events like on-premise slip or fall accidents, natural disasters, or lawsuits. Without business insurance, you may need to cover these expenses personally, potentially crippling your business. 

Additionally, business insurance can enhance credibility and foster trust with clients and partners. It demonstrates your readiness for unforeseen circumstances and commitment to protecting their interests. In some industries, comprehensive insurance coverage can provide a competitive advantage by showcasing your dedication to responsible business practices and risk management. 

Your business insurance costs depend on several factors: your type of work, the required insurance type, and desired coverage levels. Consult with your prospective insurance company’s agent to assist you in selecting the most suitable business insurance plan.

Employer’s Liability Insurance

Earlier, we mentioned that the only mandatory business insurance is employer liability insurance. Though you may be self-employed, if you employ other people, you need to make sure they are protected.

This type of insurance policy is designed to cover you and your employees if they are injured whilst at work or become ill as a result of the job they do. It will cover the legal costs, as well as compensation to the employee and any other damages you might have to pay for.

Not only this, but employer liability insurance can be used to protect your business against accidents or damages to a third party at the hands of your employees.

It’s important that you check what is covered in your policy to make sure you are protected for as many scenarios as possible.

Vehicle Insurance

If you require a vehicle for your business, the first thing you might consider is vehicle insurance tailored specifically for business use. This could be particularly important if you have a fleet of vehicles and multiple employees driving them.

It might be the case that your existing insurance policy covers your vehicle for business use, but it is always important to check. If not, you may need to take out a separate policy.

Professional Indemnity Insurance

If your business requires you to give advice to customers or clients, you should consider getting professional indemnity insurance. This type of policy will protect you if someone makes a claim against you for negligence, mistakes or bad advice.

Some examples of the types of businesses that might require professional indemnity insurance are doctors, solicitors, accountants, engineers and consultants.

If you’re unsure whether this type of policy is right for you, it might be worth speaking with an insurance broker for advice.

Product Liability Insurance

Alternatively, if your business means you sell and repair products, then you might need product or commercial liability insurance. If your goods hurt someone or damage their property, you might be forced to pay compensation. Your liability policy will cover these costs.

That being said, some public liability insurance policies will already cover you for product liability, so it’s worth checking whether you need one or two policies and which is going to be most beneficial.

More on public liability insurance next.

Public Liability Insurance

If your business takes you anywhere near the general public, then you might need liability insurance. These policies are designed to protect you against claims made by a member of the public if they are injured or if their property is damaged as a result of your work.

Some of the self-employed roles that might require public liability insurance include hairdressers, builders, and licensed traders like electricians. This applies whether you do house calls and enter their property or you work in public spaces like high streets or your own store.

Buildings and Contents Insurance

No matter whether it’s a shop front, warehouse or even just your home, if you’ve got products, equipment or items related to your business, you need to protect these.

You can cover yourself from loss, whether that is by fire, floods, theft or any other types of damages that might befall your business. This can be particularly important if you lease a premises or you need very valuable content to keep your business running.

Equipment Insurance

Finally, you might require lots of kit or machinery in order to do your job. For example, if you’re a mechanic you might have lots of tools, photographers will have expensive cameras, and you might also have pricey IT equipment that you need to protect.

In this case, you might wish to take a separate equipment insurance policy that offers a much higher and more targeted level of cover rather than relying on contents insurance alone. Some contents insurance policies won’t cover certain types of tools or equipment, so it is vital that you always check.

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