Self-employed business insurance helps protect individuals working for themselves against financial risks linked to accidents, mistakes, or claims. Yet, many self-employed professionals in the UK overlook important details when arranging cover, leading to gaps that could leave both finances and reputation exposed.
We help arrange insurance policies tailored to self-employed workers across sectors. Below, we explain the most frequent mistakes made when securing self-employed business insurance and how they could affect long-term security.
1. Relying Solely on Personal Insurance
One common misconception is that personal insurance policies, such as home or vehicle cover might automatically protect business activities. In most cases, personal insurance excludes work-related incidents.
For example:
- A laptop used for freelance work may not be covered under a home contents policy.
- Using a personal vehicle for client visits might require business use to be specified.
We suggest reviewing all policies to ensure there is appropriate self-employed business cover in place.
2. Underestimating Public Liability Exposure
Many self-employed professionals assume they have low risk of claims from the public. However, public liability insurance is often essential. It covers third-party injury or property damage caused by business activities.
Typical examples include:
- A client slipping on a floor during a home visit.
- Damage caused while working at a customer’s property.
Without public liability cover, defending even minor claims could lead to significant legal expenses.
3. Forgetting About Professional Indemnity Insurance
For self-employed consultants, designers, IT professionals, and similar services, professional indemnity insurance protects against allegations of:
- Negligence
- Incorrect advice
- Breach of confidentiality
Many sole traders overlook this form of cover, yet one professional indemnity claim could prove costly. It is not legally required but is considered vital in sectors where advice or designs form part of the service.
4. Ignoring Income Protection Considerations
If a self-employed person cannot work due to illness or injury, there is typically no sick pay to rely on. Many self-employed business insurance arrangements focus on liability cover only, without considering income protection insurance.
While income protection is not classed as business insurance, it provides valuable financial security by covering a percentage of regular income during periods of incapacity.
5. Not Reviewing Cover as the Business Grows
Business circumstances can change. Failing to update insurance policies when taking on new clients, expanding services, or increasing turnover could lead to underinsurance.
For instance:
- Buying new tools or equipment may require an adjustment to tools and equipment cover.
- Hiring staff would make employers’ liability insurance legally required.
We recommend reviewing insurance arrangements regularly to ensure the level of cover still suits business needs.
Avoid Common Mistakes
Arranging business insurance as a self-employed professional helps protect not only financial assets but also client relationships and long-term business stability. By avoiding the common mistakes outlined above, self-employed individuals can maintain confidence that they have suitable protection in place.