What insurance policies do freelancers need?

In many cases, setting up on your own can be done without any insurance whatsoever. However, depending on the nature of your work you may need some form of professional indemnity insurance to protect your clients. But what other forms of insurance do people who freelance need to know about?

What types of insurance are available?

In the main, there are five types of insurance you should consider:

• Liability insurance for interacting with the public.
• Professional indemnity insurance.
• Loss of earnings from bodily injury or sickness.
• Employer’s liability coverage, if you have people who work for you.
• Personal coverage, the same sort of thing you might have even if you’re not working for yourself.

If you are just beginning in freelance work, then you may choose to do without the expense that comes with purchasing insurance until your small business gets off the ground. However, some professions need indemnity insurance right from the outset. Typically, freelance instructors, certified engineers and legal professionals need these sorts of policies in order to operate legally. For most freelancers who don’t work in specialist areas, however, self-employed insurance is not a necessity. Where insurance comes into its own, of course, is when you might want to make a claim. Without the necessary policy documents, you could be out of pocket if something were to go wrong.

Public liability insurance

You don’t necessarily need to provide services to the public to benefit from public liability insurance. If any of your work is conducted in a place where the public might be, such as on the street or within buildings where people come and go, then look for a policy from a reputable insurer that will cover any claim that a member of the public might make against you. In some cases, you may need liability insurance if members of the public come to your work premises. A freelancer who runs a training centre from their own home, for example, should ensure their business insurance adequately covers any mishaps that may occur when people are on site. Remember that liability insurance that covers the public counts even if you know the people who might be making a claim. In other words, it is not just for strangers.

Professional indemnity insurance

A professional indemnity is sometimes needed for any work you need to sign off on. Sole traders who provide professional services – such as accountants and engineers, for example – may face a claim from one of their clients for errors which later come to light. If any negligence or error is found in a contractor’s professional advice or service, then it could result in financial loss and extensive legal fees to sort out. As such, many professional bodies require their members to take out a professional indemnity which covers the liability of the service provider as well as offering reassurance to clients. Even if you are not required to have such a policy as a self-employed professional, it is certainly worth considering taking one out.

Personal accident and health insurance

Paying premiums for freelance insurance that will fork out a lump sum if you get injured is a good idea. Employed people can at least expected statutory sick pay if they go off work following an injury. If you freelance, however, then your clients are under no obligation to pay you if your injury means you cannot deliver. A personal accident policy should deal with most of the common injuries that occur to people, whether or not they happen at work. This sort of insurance covers things like sports injuries, accidents that occur from using tools and from car accidents but they often won’t pay out if you have been negligent. As well as personal accident insurance, freelancing individuals should consider the merits of health insurance which pays out in the event that you cannot work for a time. It is a form of insurance that can be worth its weight in gold if you were to be diagnosed with a life-changing condition, for example.

Cover for employers liability

Even if you have just one employee, then you should have adequate insurance to cover any eventualities that occur from employing staff. In fact, it is a legal requirement even if as a freelancer you only employ people on short-term contracts. You can face significant legal expense and even court fines if you don’t have employers cover. Essentially, it is much like an insurance policy that covers your interactions with the public, only it deals with any accidents or mishaps that might occur to someone you are employing.

Contents and life insurance

Anyone from a self-employed management consultant to a sole trading electrician should also think about so-called consumer insurance. Many people who work for themselves don’t have adequate life insurance or even have cover for the content of their homes, something which is not advisable. Especially if you run your business from your own home, whether you operate as a contractor at other places from time-to-time, then consider just how problematic it would be to continue if your home was wrecked. Burglaries, fires and burst pipes at home may all impact on your ability to run your business properly, so contents insurance coverage, in particular, is very important to have.