A freelancers guide to insurance
Among the freedom of going freelance, it’s easy to forget that mistakes can happen and cost your business a lot of money. So when you’re the sole person in your business, you need to make sure you cover your back with the right insurance.
As an individual working with a single client or many, you’re relied upon to provide a vital support service through your skills and expertise. But if you were to have an accident at work or while playing sport at the weekend that meant you couldn’t work, your income would stop.
Equally, you need cover if you work on a clients premises to protect you against accidents such as injuring a member of staff or damaging client property. Plus, if one of your clients thinks you’ve been negligent in your work, they could sue you and claim compensation – which might amount to thousands of pounds.
Get the right cover
Don’t worry. It’s easy to cover yourself for all of the above scenarios and much more, like theft of your equipment or a fire in your home that stops you working there.
There’s a range of basic insurance that it’s sensible to have and which won’t cost you the earth. You can often buy it as a package, which helps make it simple to administer, too. The key areas are:
- Professional indemnity: Usually the single most important insurance policy for freelancers, this protects your business if a client sues you for financial loss. This could arise in a variety of ways such as your act, admission or neglect. PI covers you for financial compensation and the legal costs of defending yourself.
- Public liability: If your client property or employees or a member of the public is accidentally damaged or injured for damages caused whilst carrying on your work, this covers you for the cost of settling or defending a claim.
- Employers’ liability: It’s a legal requirement if you employ anyone, the only exception being if you’re the sole employee and you own over 50% of the shares in your company. Even if this isn’t the case you should carry Employers’ liability to prove that you are in business on your own account. It protects you against the cost of injury or illness to an employee during the course of employment.
- Personal accident and sickness: When you are the business, getting seriously ill or injured so you can’t work means your business will suffer, along with your personal income. With personal accident and sickness insurance, you’ll get a lump sum or a weekly amount, depending on what’s happened, to cover some of your business losses. It usually protects you for incidents away from work, too, like if you were injured while cycling at the weekend.
- Tax enquiry and legal expenses: Protects your business against the costs of legal action taken against you, such as contract disputes, debt recovery, tax and VAT investigations which can all add up to thousands of pounds.
In addition, consider office insurance, which protects your contents and equipment like IT equipment and mobile phones both in the office and outside it. If you work from home, these items usually aren’t covered on your home contents policy.
Look after yourself
While it may look like a daunting list of policies, the fact is that freelancer insurance is a fairly small monthly payment that could protect you against expensive lawsuits or compensation pay-outs for a seemingly innocuous mistake.
And with the ability to pick and choose the level of your cover, it’s a sensible part of building your business.
A freelancers guide to insurance
An introduction to risk management
Professional indemnity insurance explained. A simple guide to PI.
Small Business Insurance – Understanding the essentials