Who do sole traders need insurance?
Unhappy clients
One of your clients is pitching for a big IT contract, but crucial information falls into a competitor’s hands and they lose out. After an investigation, the client believes the leak accidentally came from you and decides to take legal action for a breach of confidence.
Tailoring your sole trader policy to include professional indemnity insurance means you can get assistance with funding both defence and settlement of the claim.
Confidential customer data loss
When you work independently, the smooth running of your systems can be crucial to your business and reputation – so a cyber-attack can prove costly. When a hacker deploys ransomware to infect your system, the safe return of customer data and the full operation of your computer hardware relies on available finances, time and expertise.
Cyber and data insurance can help a sole trader cover the cost of the ransom, account for days of lost business, and offer you access to our cybercrime experts.
Injury prevents work
During a small gap between contracts, you take a family holiday. But when out walking you fall and injure yourself and the resulting hospital stay means you can’t fulfil your new contract.
Sole trader insurance with personal accident cover built in can assist when you’re unable to meet work requirements due to unforeseen circumstances. It can pay a lump sum of money if the injury is permanent or a weekly pay-out if the problem is more temporary, helping you to focus on your recovery.
What insurance is available for sole traders?
Professional indemnity insurance
Your role may involve providing professional advice, guidance or services to several clients. This type of work could expose a sole trader to the risk of legal action or compensation claims. That’s where professional indemnity (PI) insurance can help.
A client might claim your advice resulted in negative consequences. For example, you disclosed confidential information, or you damaged their reputation with a false statement. PI insurance can assist with the legal fees associated with defending or settling a claim or for correcting a professional mistake.
Public liability insurance
When you run a business, anyone can file a claim against you and as a sole trader you would be responsible for settling that yourself. So, public liability insurance can provide welcome protection.
The nature of your work means you interact with many people while you’re pursuing leads and fulfilling contracts. Anyone could say they tripped over your laptop bag in a reception area, or that you spilt a drink on their electrical equipment. Build public liability cover into your policy to help to safeguard against the unexpected so you can concentrate on growing your business.
Personal accident insurance
Operating as a sole trader can be liberating and rewarding. But if you’re unable to work, your ability to earn can also be impacted. Whether you suffer an injury from a fall or during a game of football, an accident could have longer-term effects.
If you physically cannot work for a period of time, personal accident insurance can assist a sole trader by providing a sum of money. If you’re out of action for more than two weeks, this cover can offer eligibility to a weekly pay-out and help with the cost of hiring support staff.
A sole trader may also choose to tailor their policy with other relevant products to meet their requirements, including cyber and data insurance, portable equipment cover and legal protection.
Tell us more about what you do as a sole trader and we'll help build an insurance policy that's right for you.
Get a quoteHow does a sole trader differ from self-employed or freelance?
The primary difference between sole traders and self-employed professionals is that ‘sole trader’ describes the structure of your business. Meanwhile, ‘self-employed’ simply means you are not employed by someone else. Self-employed people also often pay tax through PAYE.
There can be crossover between the two – sole traders are self-employed, as they run their business by themselves. However, not all self-employed people and freelancers are sole traders – if you’re a sole trader, you’ll typically register with the government (external link), either under your own name or a business name.
If you are instead working on a freelance basis, gearing your business insurance towards the common risks that come with self-employment – as well as risks associated with your industry – may bring extra reassurance.
How much does public liability insurance cost for a sole trader?
The cost of public liability (PL) insurancefor asole trader will depend on the type of work your business carries out, where you carry it out and how much coverage you think you’ll need.
Hiscox public liability cover starts as low as £5.20 per month*. Our experts work with you to understand your sole trader business and seek the best insurance cover to suit your requirements.
Depending on the type of contracts you have or intend to have, we also offer PL cover up to £10 million for legal costs, compensation pay-outs and expenses.
*Figures based on an average of all public liability policies sold to at least 10% of our customer base between April 2023 and April 2024.
What insurance do I need for running my business from home?
As a sole trader or self-employed professional, you may run your business from home – even so, your insurance requirements will usually line up with those operating from commercial premises.
Your professional risks may be similar when you work from home, so you may still consider a policy including public liability insurance, professional indemnity cover, personal accident insurance, cyber and data cover and legal protection.
It may be wise to check your home insurance policy as this may not account for your business assets – so contents cover, with portable equipment cover as an add-on, could also be helpful.
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