I’m Self-Employed: Do I Need Business Insurance?

Whether or not you need business insurance depends very much on the type of work you do, where you do it and whether you employ other people.

Working from Home

If you run your business from home, it’s important to talk to your current home-insurance provider to find out if you are covered. Generally speaking, an insurer will be happy to cover business equipment in the home as long as you are working on a clerical basis (e.g. office and administration work) and don’t have client or customer visits or meetings at your home.

Types of Business Insurance

The following types of cover may or may not apply to your business:

  • Motor insurance: if your business uses vehicles, make sure that your existing car-insurance policy includes cover for business use. If an employee is using their own car in connection with your business, it’s imperative to check that their own insurance policy covers them for business use.
  • Professional indemnity insurance: if you work in a profession that gives advice to clients, you should have indemnity insurance to cover you in case you are negligent or make a mistake. Professions that should have this cover in place include doctors, solicitors, engineers, architects, journalists, accountants, business consultants and financial advisers, amongst others.
  • Employers’ Liability Insurance: it is a legal requirement that if you employ people you have insurance in place to pay out compensation if those employees are injured while doing their jobs.
  • Buildings and contents insurance: if you own or rent premises, this cover will protect you if those premises are affected by fire, flood, theft or other damage.
  • Equipment insurance: the kit and machinery you use for your business can be insured for the cost of replacing it. You can also get cover that will repair certain items if they break down, which could be worth thinking about for computers or other essential kit.
  • Public liability insurance: this pays out in the event of a mistake that causes injury or damage to a customer or member of the public. You’re more likely to need this if people visit your premises, and for some businesses it is a legal requirement, so make sure you know if this is the case for your business.
  • Product liability insurance: if goods you’ve made, sold or repaired hurt or kill someone, or damage someone’s property, then you might have to pay compensation, even if you haven’t been negligent. This type of cover is sometimes included with public liability insurance, so this is worth checking.
  • Goods-in-transit insurance: if you have goods or stock you send around the country, you might want to think about protecting them against loss or damage while in transit. International transit by sea or air needs to be insured separately.
  • Credit insurance: this covers you against the risk of your customers not paying you because they go bust or don’t pay on time. With this type of insurance you will still have to carry some of the risk yourself, for example the insurer might cover you for 80% and you’ll have to cover 20%.
  • Key person insurance: this covers the business up to an agreed limit for any financial losses that would result from the sudden death or illness of a crucial member of the company.
  • Legal expenses insurance: this covers things like solicitors’ fees and court costs in the event that you need to defend a legal action, such as an employment or contract dispute.
  • Business interruption/business continuity insurance: in the event of a flood or a fire, this insurance will cover you for costs incurred and loss of profits.
  • Travel insurance: if you or your employees need to travel abroad for work, you might want to consider business travel insurance. If you have a personal travel policy, check with them rather than assuming you are covered for business travel.

Many insurers offer business insurance ‘packages’ that include cover for a number of these potential risk areas. Consider which areas of risk are likely to affect your business, then shop around to find a policy that meets your needs.