Self-employed insurance: Here’s what you need to know

Written by India Johnson

Being self-employed comes with loads of great freedoms. The ability to set your own hours, work in different (read: cool) environments and choose your work – to name a few. But on the flip-side, you also need to deal with less fun stuff like tax and insurance. 

We’ve got you covered when it comes to tax – but we’re not insurance experts. Enter: our insurance partner, Superscript, who’s experts are here to break down exactly what you need to know about protecting yourself as a self-employed professional. Here goes:

What is business insurance and is it a legal requirement?

Business insurance is an umbrella term to describe a range of different covers you can get to protect you against the risks your work involves. These include things like public liability, business contents and professional indemnity cover, plus a fair few more. We’ll explain what all of these mean in a little more detail in the next section. 

As for whether business insurance is mandatory – for the most part, it’s not. The only cover that’s legally required is employer’s liability insurance, but only if – as the name suggests – you employ anyone (full time, part-time, or temporarily). 

Having said that, you may find that certain professional bodies and trade associations require members to have specific business covers. And certain clients may ask you to take out specific covers before agreeing to work with you.

What covers do self-employed professionals need? 

The covers you’ll benefit most from will vary according to the work you carry out. But broadly speaking, key covers for the self-employed think about are:

  • Professional indemnity insurance
  • Public liability insurance
  • Business contents insurance
  • Cyber insurance
  • Commercial legal protection 

What is professional indemnity insurance?

Professional indemnity insurance is one of the most common and important covers for self-employed professionals. It covers compensation and defence costs in relation to a client suffering financial loss that happens because of your professional services. This is a good example of cover that’s sometimes required by clients.

When it comes to getting professional indemnity cover, it’s important to make sure you fully understand the ins and out of the policy. With some, for example, you won’t be covered for events that have taken place before the cover itself started. Superscript’s professional indemnity insurance does give you unlimited retroactive cover, meaning that even if you need to make a claim concerning work carried out before your policy start date, that’s okay – so long as you didn’t know about it before taking out cover. 

An example potential professional indemnity claim:

  • If your computer broke, causing you to miss a project deadline which resulted in your client losing money, it would be within their rights to make a claim against you for breach of contract. In this case, professional indemnity insurance would cover the cost of dealing with the claim.

What is public liability insurance?

Another common cover that’s often required by clients is public liability insurance. This covers the cost of compensation and defence if a member of the public is injured or their property is damaged because of your work. (In business insurance terms, a member of the public is anyone who isn’t your employee). 

Examples of public liability claims:

  • You’re working at a client’s office. They trip over your charging cable and break an arm. They’re unable to work for some time, and so make a claim against you for the money they lose.
  • You’ve invited a client to a meeting at your home office. They slip on a rug and fall over, chipping a tooth in the process. They require expensive emergency dental treatment, and so make a claim against you for the money this costs them.

What is business contents insurance?

Business contents insurance is something to consider if you work with expensive equipment that would be costly to repair or replace. 

Policies can vary quite a lot, so it’s worth checking that yours covers exactly what you need. Think about where you’re based; for example, at home, a co-working space, or an office – and whether you require cover for working abroad. Superscript covers all these circumstances and situations as standard, but not all insurance providers do.

What is cyber insurance?

Although cyber insurance isn’t always required by clients, it’s a really worthwhile cover to consider if you operate in any way online, especially if you work with personal data. 

Cyber insurance tends to offer technical support, PR assistance and financial assistance to help you deal with situations like:

  • Accidental privacy breaches
  • Cybercrime
  • Hacking, extortion and ransomware
  • Malware
  • Denial-of-Service attacks

Example of a cyber insurance claim

You fall for a dodgy email link which silently uploads malware onto your computer, making it impossible for you to do your work and putting your clients’ data at risk. Cyber insurance will give you the expert support necessary to remove the malware, assess the data breach, pay for the downtime as well as support communicating the issue to those affected.

What is commercial legal protection?

Commercial legal protection is designed to give you access to the same level of legal expertise that you’d get at a large organisation with an in-house legal team. This cover can give you access to legal expertise on IR35 and tax as well as other general legal business advice.

Example of a commercial legal protection claim

You submit your tax return under the impression that you’ve done everything correctly, but HMRC disagrees and launches an investigation into your taxes. Commercial legal protection may cover the cost of tax consultants to support you.

Why we’ve partnered with Superscript

Like Finmo, Superscript’s all about taking complex processes making them a whole lot easier for sole traders. 

Unlike traditional business insurance providers, Superscript’s cover is modular – so you can pick the cover you want – and it’s offered on a flexible monthly subscription basis, so you only ever pay for the cover you need, when you need it. Plus their 10-minute quotation process guides you through your options to make your choices simple. 

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