Self-Employed Business Insurance

I’ve updated this post on 30 June 2020

When you’re self-employed business insurance offers you protection and peace of mind.

There are seven different main types of business insurance. Although it is unlikely you will need them all, you may need more than one.

Here I look at the different types of self employed insurance, help you decide what you need & show you where to get online quotes.

Types of Business Insurance When You’re Self Employed

Insurance protects you against risks. For example the risk of theft, getting sick or accident.

When you take out an insurance policy the insurer calculates the likelihood of a risk happening and uses that to determine how much you pay.

When you’re self employed it’s your responsibility to:

  • Work out if you need insurance
  • Pay for insurance yourself
  • Make sure the insurance policy is right for you and your business

One insurance policy covers you against one particular risk.  Therefore you may need to take out more than one type of business insurance. But these will be included in a single insurance policy if you choose a provider.

Here are some of the 7 most common types of Self Employed Business Insurance:

  • Professional Indemnity
  • Public Liability
  • Product Liability
  • Business Equipment
  • Business Interruption
  • Employers Liability
  • Business Motor

1. Professional Indemnity

Professional indemnity (PI) insurance is mainly for service-based industries.  It covers the legal costs and expenses incurred if you’re found to provide incorrect or inadequate advice which causes your client financial loss.

Self-employed individuals who may need Professional Indemnity Insurance include:

2. Public Liability

Public liability insurance covers you for legal fees and compensation in the event that a member of the public is injured or their goods are damaged as a result of coming into contact with your business or member of your team. This can be at your business premises or on site.

Here’s some examples of how public liability works:

A self-employed beautician visits a customers house and spills wax on their customers’ carpet.  The beautician would be able to claim on their public liability insurance for the damage.

Many self-employed individuals choose to take out public liability insurance, especially if they have clients visiting their premises or they go to theirs such as:

3. Product Liability

Products liability is important if you have a business that supplies goods and products. It is insurance cover for legal fees and compensation in the event that someone is injured or their property is damaged by something you have sold them.

If you make, repair and manufacture any products then you should consider taking out public liability insurance, even if you have safety tested your products.

Say you are a self-employed candle maker selling on Etsy then it is advisable to take out public liability.  It is insurance cover in the event someone is damaged by a defective candle for example or a fire.

4. Business Equipment Insurance or Portable Equipment Insurance

Business equipment insurance covers the cost of replacing equipment which has been lost, stolen or damaged.

When you’re self employed it is your responsibility to have your own equipment – some of which may be expensive and business critical.

Business equipment insurance or portable equipment insurance is a way to protect yourself against unexpected loss or damage for things like:

  • Mobile phone
  • Laptop
  • Tablets & iPads
  • Tools
  • Camera equipment

Many self employed individuals choose to take out public liability insurance, especially if they have clients visiting their premises or they go to theirs such as:

5. Business Interruption Insurance

Business interruption is financial cover if you are unable to trade to compensate you for loss of income or profits if a major event or natural disaster happens.

This includes things like:

  • Fire
  • Explosion
  • Earthquake
  • Theft
  • Vandalism

Some business interruption policies even offer cover for increased trading costs, if you find a way to continue to run your business despite the event.

Business interruption insurance only covers financial losses. Separate insurance policies to cover things like premises and equipment will still be required.

When you’re self employed not being able to earn, regardless of who’s to blame, can have a major impact on your life.  

Business interruption insurance can offer you protection and peace of mind that you can continue to pay your personal bills while you get your business back on its feet.

6. Employer’s liability

Employers liability insurance is a legal requirement when you employ people.

It is cover for your business in the event that your employee(s) are injured or killed during the course of working for you.

Employers liability only covers people who are on your payroll.  It does not cover injury of sub-contractors, consultants or contractors who invoice you for their services.

7. Business Motor Insurance

Business motor insurance is different to personal motor insurance and is often overlooked.

If you plan to use your car for business purposes then you should let the insurer know and extend your policy for business cover.

Business motor insurance is generally more expensive than personal motor insurance.  This is because insurers consider that a business driver will use their vehicle more and drive more miles, in particular during rush hour.  

Do you need insurance when you’re self employed?

It is not a legal requirement to have insurance for many self employed individuals.  

Despite this, many choose to take out insurance regardless to:

  • Protect themselves in the event of a claim
  • Cover the cost of replacing expensive equipment in the event of loss, damage or theft
  • To meet client requirements

You can get insurance quotes over the phone or by going online.  The key is to make sure you take out the right insurance for you, so you are correctly covered.

Self-Employed Insurance Providers

There are some insurers who specialise in protecting the self-employed, including these:

 Simply BusinessAxaPolicy Bee
Professional Indemnity
Public Liability
Product Liability
Business Equipment
Business Interruption
Employers Liability
Van x
Best forAll types of insuranceAll types of insuranceProfessional indemnity insurance
Get QuoteGet QuoteGet Quote

Wrapping Up

When you’re self employed, every penny counts.  So if you are starting out ALWAYS:

  • Get more than one insurance quote to check the price you’re being quoted;
  • Be honest on your application so you get the right insurance policy;
  • Do a review every year before you renew to check you are getting the best price.

New Here? Learn how to set up the financial side of your business with these easy to understand guides and resources:

  • Sole Trader or Limited Company? – Download my free calculator to check which business structure would help you to pay less tax;
  • Tax Records and Bookkeeping – Understand what tax records you’ll need to keep and how to set up your own bookkeeping system;
  • Self Employment Taxes Explained – Learn what taxes you’ll pay, how much and when;
  • VAT Guides – From registration to de-registration, VAT schemes and thresholds, these guides will take you through the basics every UK small business owner needs to know;
  • Invoice Template – Free template and step-by-step guide so you can get paid by your clients.
Anita Forrest
About Anita Forrest

Anita Forrest is a Chartered Accountant, spreadsheet geek, money nerd and creator of - the UK small business finance blog for the self-employed community. Here she shares simple, straight-forward guides to make self-employment topics like taxes, bookkeeping and banking easy to understand.