For many, the concept of self-employment may seem liberating, providing you with the unique ability to be your own boss, determine your own hours and potentially complete tasks from the comfort of your sofa. Especially in the digital era, evolving technology and social media capabilities allow people across industries to market their talents to an international audience and connect with clients or customers through the click of a button. In fact, there are nearly 5 million self-employed people working within the UK—contributing to 15% of the workforce, according to the Office for National Statistics.

And although self-employed or freelance work may appear as the perfect way to pursue your professional passions, the reality isn’t quite that simple. Indeed, being a self-employed or freelance worker means that the bulk of your business responsibilities—including initial investments, marketing and sales, scheduling concerns, securing proper work supplies and raw materials, cleaning, bookkeeping, handling regulatory concerns, ensuring customer satisfaction and hiring any additional staff—falls on your shoulders. Considering you likely started your solo career to excel in your specific area of expertise, taking on this unfamiliar pile of extra duties can be daunting and greatly increase your risk of error.

With this in mind, it’s crucial that you protect yourself against the various risks of self-employed and freelance work by purchasing robust insurance cover. Whether you are a carpenter, contractor, decorator, photographer, designer, online retailer or in any other sector, consider the following insurance solutions when embarking on your self-employed or freelance career.

Insurance Solutions

• Public and products liability insurance provides cover in the event that your products or services are responsible for any bodily injury, harm or property damage to another client or the public. For example, a self-employed carpenter could be found responsible if they unintentionally damage a client’s or member of the public’s property while providing their services. Or a self-employed online retailer could be found responsible if a product they supply causes injuries or damages to a client—even if they don’t manufacture it.
• Professional indemnity insurance will protect you against any claims of negligence that result from perceived errors or omissions in your professional services. This form of cover is especially vital for self-employed people that provide any form of professional advice. For instance, a self-employed makeup artist could be found negligent if they recommend a beauty product or treatment that causes the client to experience an allergic reaction.
• Equipment breakdown insurance provides cover when your work-related equipment or tools need to be replaced or repaired. This is crucial for self- employed people that require high-value, expensive equipment or tools to conduct their work activities, such as a graphic designer using a computer or a photographer using a camera.
• Goods-in-transit insurance protects against goods or stock getting lost or damaged while being transported. This cover is important for self-employed people who frequently distribute their products via road, rail or overseas.
• Trade credit insurance offers protection against the risk of customers or clients not paying you for your goods or services. Trade credit insurance is vital for self-employed or freelance workers in the construction sector such as subcontractors, who wait an average of 107 days for payment, according to the Asset Based Finance Association.
• Income protection insurance provides compensation in the event that you are unable to work due to injury or illness. This form of cover is crucial for self-employed and freelance workers, considering they do not qualify for statutory sick pay or redundancy pay.
• Legal expenses insurance can offer protection in the event of any defence costs that you incur from a work-related legal dispute or claim.
• Building and contents insurance is vital if you decide to run your solo business outside of your home, such as in a separate office building. This cover protects your business property and its contents in the event of unexpected damage (e.g. vandalism), theft or natural disaster. In addition, consider business interruption cover as an extension to your policy, which offers protection against your loss of income after a disaster and during the recovery process.
• Keep in mind that if you are conducting your self-employed or freelance work from the comfort of your home, you need to share this information with your broker to update your current home insurance policy. If you don’t inform your broker of your working situation, household insurance claims that result from work-related matters might not be covered.
• Cyber-insurance protects against damages that result from threats to your solo business’ technology or data—this includes stolen or damaged information, liability and recovery costs. This form of cover is especially crucial if you conduct your self-employed business operations primarily online—such through e-commerce, online scheduling or a digital payment system.
• Employers’ liability (EL) insurance is legally required as soon as you become an employer. This cover will protect you against the cost of compensations for your employees’ injuries or illnesses caused by work-related activities. Despite the fact that you might have as few as one or two additional employees, all businesses are required in most circumstances to purchase EL cover as soon as they start employing people. You can be fined £2,500 every single day you are not properly insured, and you can also be fined £1,000 if you do not display your EL certificate or make it available to inspectors when they ask.

If you do decide to incorporate more staff members in your business, you might also want to consider the following cover:

• Motor insurance is important if your work requires the use of vehicles. If you or your employees are using personal vehicles for work, be sure to communicate with your broker (and have your employees do the same) to determine whether any existing private motor cover includes business use. If not, you and your employees will need to expand your private policies.
• Key person insurance offers compensation for any financial loss that would result from the sudden death or illness of an important member of your company. Especially when you have a small—but valuable—staff, this cover can be useful.

For additional guidance in determining the best insurance solutions for your self-employed or freelance career, contact Lockyers today.