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Freelance insurance

Business insurance for self-employed workers

Mehdi Punjwani
Written by  Mehdi Punjwani
5 min read
Updated: 02 Apr 2024

Being a freelancer can be liberating, but it also means getting used to a whole new set of risks as an independent business owner. Freelance insurance, also known as self-employed business insurance, can help - here’s what it covers and how it can help you as a freelancer.

What is freelance insurance? 

Freelance insurance is a type of business insurance designed for self-employed individuals, offering financial protection in the event that something goes wrong.  

business insurance

Do I need business insurance if I’m self-employed? 

Freelancing can be risky, and there are a number of things that can possibly affect your finances, income and reputation - having cover in place can protect you financially in such circumstances. For example, you can take out cover for your equipment and tools if they’re damaged or stolen, or if you become ill or injured and you lose income as a result.  

Furthermore, freelance business insurance can cover the cost of legal fees and compensation if a client believes your work has negatively affected their business, or if your work results in someone’s injury or damage to their property. 

Is freelance insurance compulsory? 

Freelance insurance isn’t generally compulsory but it is recommended, as the costs you could potentially face without it can be quite high. One instance where it is legally required is if you have employees, in which case you’ll need employers’ liability insurance - this protects you financially if an employee is injured or becomes ill as a result of the work they do for you. 

Additionally, it’s worth noting that if you join a professional body then you may be required to have professional indemnity insurance, which covers potential legal fees and compensation you might need to pay. 

What does freelance insurance cover? 

The cover you can take out as a freelancer will depend on the nature of your business - but most providers will offer the following policies: 

  • Professional indemnity insurance: A professional indemnity insurance policy covers you against the cost of legal fees and potential compensation you might need to pay if a client raises a complaint of professional negligence against you as a result of your work. For example, if you miss a deadline or provide what your client views as poor advice that results in losses and you’re found to be at fault, you’ll be covered for any resulting costs 

  • Public liability insurance: Public liability insurance can be useful even for freelancers - it offers cover in case someone visits your workplace and becomes injured or their property is damaged on your premises, or if you’re working on the road and you cause damage or injury to someone 

  • Employers’ liability insurance: If you employ others as part of your business you’ll be legally required to take out employers’ liability insurance. It protects you against legal fees and compensation relating to employee injuries and illnesses resulting from the work they do for you 

  • Equipment cover: Equipment cover insures you against the cost of repairing or replacing any equipment you use for work if it’s damaged or stolen. It’s useful even if you work from home, as home insurance won’t cover items used for business 

  • Income protection cover: Income protection insurance is vital for freelancers as it offers cover for your income if you have to stop working as a result of an illness or injury. It usually gives you part of your average income during the time you’re unable to work 

  • Business interruption cover: Business interruption insurance also protects your income if your work is affected by things like floods, fires, equipment breakdown, or supply chain issues  

  • Product liability insurance: If your business involves selling products, a product liability insurance policy covers you in the event that your products cause an injury or illness, so you’ll be able to claim for legal fees and potential related compensation you might have to pay 

  • Legal protection insurance: Legal protection insurance is important if you need to take legal action against clients, for example if they refuse to pay for work that you’ve done and you need to pursue payment through court 

  • Cyber insurance: If you handle personal or sensitive data as part of your work, you have a responsibility to protect it in the event of a cyber attack. Cyber insurance can help with the cost of technical assistance, data recovery and legal costs for related claims 

  • Personal accident cover: Personal accident cover can give you a lump sum payment if you’re injured and unable to work as a result, and can also cover the cost of hiring or training a replacement for the duration of your time off 

How much does business insurance cost for freelancers? 

The cost of business insurance for freelancers will depend on the type of work you do, how much you earn, and the type and amount of cover you take out. It’s always important to compare quotes to ensure you’re getting the best value for money. 

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