MoneyMagpie

Oct 06

Self-employed insurance

If you’re self-employed, you might need to think about self-employed insurance. You may even be required by law to have certain kinds of insurance. Moneymagpie investigates…

 

What is self-employed insurance?

If you’re self-employed and work only for yourself, you might need to think about getting some form of insurance. Depending on the business and how you trade, you’ll be required by law to take out some types of insurance. Not all insurance is compulsory but it’s important to think about which ones might apply to you.

Here are just a few you might need:

  • Premises insurance. This will cover the property you choose to work in. Even if you work from home and you already have home insurance, this will typically only cover you for residential use.
  • Employers’ liability insurance. If you employ someone, then you’ll need to get them covered, making this a must. This insurance  provides cover for claims made by employees who are injured or become ill as a result of their employment.
  • Health and accident insurance. This will pay out either a regular income or a large sum if you’re sick or unable to carry on working because of an accident or sickness.
  • Vehicle insurance. Even if you have them insured privately, you’ll need to get this done for your business – if you use your car or other vehicle for your work.
  • Public liability insurance. This covers you against claims made by the public who hurt themselves in your place of work. It’s necessary for some kinds of work, and if you run a shop or offer a service to the public on your premises, you’ll probably need it.
  • Goods, stock and material insurance. This covers you against damage to your goods and material. If you have a lot of stock, a factory or a big warehouse full of stuff, you should have this. Even if you work from home and have a home contents insurance policy, you should consider it.

 

Do I need self-employed insurance?

Running a business is risky which is why insurance is sometimes a legal requirement and also helps to protect your company.

As an employer, you’re legally required to have employers’ liability insurance. If you use motor vehicles for your business, you’re legally required to have the minimum of third party motor insurance.

Your job will determine what kind of insurance you need, especially if you’re dealing with the public. For example, say you’re a beauty therapist or mobile hairdresser. You might rent a space in a salon that already has public liability insurance cover. However, if a client wants to make a claim, it will be against you, not the salon. This means you might want to take out professional indemnity insurance.self-employed insurance

Professional indemnity insurance is when a dissatisfied client might want to take action against you and claim compensation. They might not be happy with your work or a mistake you made has cost them money.

You might have expensive equipment in rented spaces that would need insuring in case they become damaged.

The Association of British Insurers has a great guide on insurance for small businesses.

 

What do I need to avoid?

Pretty useless types of insurance when you’re self-employed are:

  • Payment protection insurance (PPI). This is usually sold alongside loans and is only really paid out when you lose your job. When you’re self-employed, you don’t have a job, so it’s hard to argue you’ve lost it! Despite this, a huge number of people – both employed and self-employed – have been missold PPI. Check out Moneymagpie’s guide to getting your money back. If you’re offered it, just say no and put the money you’ve saved on that policy into paying off your loan faster.
  • Income protection insurance. You’d think that this would be an essential when you’re self-employed but in fact it’s particularly unhelpful. Insurers have so many get-out clauses for the self-employed that it’s almost impossible to get money out of them if you really need it.

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