Business insurance for The self-employed

Self-employed insurance isn’t a specific product. It’s simply business insurance tailored to a self-employed person’s needs: a series of individual insurance types combined in one package. 

That means your policy might consist of multiple types of cover. 

Public liability insurance could provide cover for self-employed people if a member of the public suffers an injury or property damage due to your work. Professional indemnity insurance, on the other hand, helps to protect you if a client claims you’ve made a mistake or been negligent.

You can build a specific policy to suit your self-employed business needs. For example, you may choose to include public liability insurance, professional indemnity cover, or cyber and data insurance. 

So, if you’re a self-employed plumber, you might want to build an insurance policy that protects you against claims commonly made against your trade. Public liability insurance, for example. And if you employ anyone, even casually, you’d likely need to include employers’ liability insurance too. 

If you provide services, perhaps as a designer or architect, your policy might include different cover types. For example, professional indemnity insurance to mitigate against claims made over a design mistake or poor strategic advice. Another solution could be business contents insurance, to help protect your equipment.

In the UK, self-employed people are not legally required to buy insurance unless they employ others. In that case, you’ll normally need employers’ liability insurance to stay within the law. 

Certain types of cover might be required by some clients as part of their contracts too. For example, you may need to buy public liability cover before work can officially begin. Some trade organisations also ask their members to invest in professional indemnity insurance during the application process. This applies to the likes of solicitors, accountants and financial advisers. 

Furthermore, without insurance, there’s a chance slip-ups or out-of-the-blue problems could leave you with a big bill for things like legal fees, compensation pay-outs, repairs or data recovery.

Typically, many self-employed businesspeople start thinking about insurance when they begin working for themselves, since risks can surface as soon as you get started. 

For example, an unexpected claim could arise if a courier trips on a loose patio stone while collecting your first jewellery design shipment. Or a cyber-attack could knock you off your stride on website launch day. 

Self-employed people may take out insurance when they notify HM Revenue and Customs (HMRC) to set up as a sole trader. Those working under other arrangements might instead purchase insurance when they register their limited company or launch a business partnership.

The amount of cover a self-employed person might need depends on what you do, the insurance types you select, and the cover limits you set. 

At Hiscox, we know self-employed businesses are diverse, and that risks vary across industries. For example, in the financial and legal sector, getting things wrong can come at a high cost. So, accountants might need to think about a higher level of professional indemnity insurance than those in other lines of work. 

Meanwhile, if you’re a self-employed event organiser, proximity to people could make public liability insurance helpful. 

Thinking about how much a worst-case scenario might cost could help you set cover limits.

When you’re self-employed, public liability insurance can help manage potential risks. Although there are no legal requirements for public liability insurance, many solo professionals find it reassuring. 

This cover can help shield you against court and compensation costs if your activities lead to injury or property damage. Risks can spring from unexpected places. For example, you might visit clients for meetings as a self-employed IT consultant. If someone trips on a cable, they may take you to court. 

Learn more with our public liability FAQs.

Beyond the main covers of public liability, professional indemnity and employers’ liability, there are other insurance types relevant to the self-employed. These include: 

• Personal accident insurance – a safety net for those who are self-employed and don’t get access to sick pay.
• Portable equipment insurance – this can assist with repairing or replacing your laptop, smartphone or specialist gear in the event of theft, loss or damage. 
• Cyber and data insurance – this may lend a helping hand to self-employed people facing data breach complaints or hacking. 
• Legal protection insurance – if you work with contracts, invoice customers, own business premises or have employed staff, this can help negotiate your rights when disputes crop up.