Do Freelancers Need Business Insurance?

Choosing to work as a freelancer is a great idea for those who like its flexibility. For many people, they can build a business and create an income around their family commitments. It can also be an excellent way to gradually build up a business on the side while working as an employee for a company.

However, becoming a self-employed or a freelancer will mean you lack the legal protections offered in an employed job. This means that you will need to buy your own freelance insurance to avoid potential risks.

When you work as an employee for a large company, they will have a whole team in place that will deal with claims for accidents and injuries from careless mistakes or deal with problem clients that are making false claims.

When you work for yourself, freelance insurance will protect you against clients that try to claim compensation due to you making a mistake with your work, providing advice that causes them to lose income, or failing to deliver your work on time to their expectations.

Your insurers will do all they can to settle genuine claims out of court and negotiate the best outcome for you and your business. They will also challenge false claims and help to protect your business name and reputation.

In this guide, we will take a look at the most popular types of freelance business insurance, and what they cover so you can make a more informed choice about your insurance needs.

  1. Why freelancers need insurance
  2. Freelance liability insurance
  3. What public liability insurance covers
  4. Freelancer professional indemnity insurance
  5. Who can benefit from professional indemnity insurance
  6. Leading freelance insurance UK provider

Why freelancers need insurance

Nothing in this world is guaranteed. Having the right insurance cover in place will protect you from accidents and injuries sustained by your customer or clients, but it will also cover you for loss or damage to your essential work tools and equipment, such as your laptop and phone.

To put it simply, the right combination of freelance insurance will provide protection from hefty financial claims if there is an injury or accident, help if you should need to stop working due to a personal accident or illness, and cover your professional indemnity if a client sues you for giving bad advice or guidance.

Let’s say that you have a client relationship that goes wrong because some unexpected issues have caused you to deliver late on your contract, and your client is refusing to pay your invoice. This is why it is sensible for you to take out professional indemnity insurance to cover you should a situation such as this arise.

There is no way to guarantee that every job will go smoothly – freelancing is a risky business. Over the years, you could end up facing many challenges, such as a client relationship breakdown where they will claim to be unhappy with your work or you fail to get unpaid invoices settled.

You may provide the best quality service in the world and be good at what you do, but it doesn’t mean you will never have to deal with a bad customer. The right type of freelance insurance helps in many different scenarios, both large and small.

Freelance liability insurance

If your freelance work involves contact with people in a work setting, you should take out public liability insurance. This type of insurance protects freelancers against risks in the workplace, such as accidental injury or damage claims made by third parties.

Public liability insurance is probably the number one choice for freelancers who will be dealing face to face with people. This will cover you when interacting with your clients, customers, or even members of the general public walking past your business property.

Unfortunately, some customers or clients will seek to take advantage of you because they consider freelancers to be small and insignificant compared to a large limited company.

You will sometimes have to deal with a client that thinks you will be unable to fight back against their claims because you are not backed up by an in-house team of legal experts. But by taking out professional freelance insurance to cover your needs, you will be able to access the services of a legal team to fight on your behalf.

Being properly insured means that your business reputation won’t be denied by the actions of a dodgy customer that tries to take advantage of you. Your freelance business will be protected both legally and financially.

What public liability insurance covers

Should a customer, a passer-by or anyone you come into contact with get injured on your premises or their property is damaged, you would be liable, and they could sue you for damages.

When choosing your public liability insurance, read the small print on the policy to make sure it protects you against people making accidental injury and property damage claims. Your insurance should cover any legal expenses you need to defend your business and any resulting compensation claims should you be found liable.

How much public liability insurance you need as a freelancer will vary according to your business type. It is up to you how much cover you want to take out, but it is typically available with £1 million, £2 million, £5 million and £10 million of cover in the UK.

Freelancer professional indemnity insurance

Professional indemnity insurance will protect you against claims that your advice, guidance or service was negligent. This insurance is invaluable for freelancers selling professional advice or using their expertise to help clients.

For example, suppose you are a freelance business consultant, and you give out the wrong advice or make an error that causes your client financial harm. In that case, your professional indemnity insurance will cover your legal fees and any compensation you need to pay out.

Who can benefit from professional indemnity insurance

In most cases, clients seeking advice from a qualified freelancer or hiring their services will require you to have professional indemnity insurance before they agree to work with you. Freelance professions that would benefit from this insurance include:

  • Accountant
  • Architect
  • Business consultant
  • Contractor
  • Web designer
  • Civil engineer
  • Gardener/landscaper
  • Family lawyer
  • Photographer
  • Solicitor
  • Building surveyor
  • Videographer
  • Web developer
  • Wedding planner

As a freelancer, you have a lot to lose besides money should you be sued. A client making a claim against you can be incredibly damaging to your business credibility, image and reputation.

Having professional indemnity insurance in place can be very reassuring if any discrepancies arise. You will know that you are protected in the event of any allegations.

Leading freelance insurance UK provider

We hope that this guide has provided you with more insight into the types of freelancer insurance available today. Freelance business insurance should be an essential element of your work, along with keeping your accounts and completing your taxes each year.

Remember that you don’t need to choose one single standard insurance policy for your freelance business needs. You can select flexible cover that can be tailored to meet the requirements of your business.

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