Advice for the Self Employed – What Insurance Do You Need?

If you use any vehicles as part of your business, you’ll need to ensure your motor insurance covers them for business use. The same goes for any employees who use their vehicles in the course of work. Perhaps as a delivery driver, or if you travel to and from customers. Check with your insurer, as you may need to update your policy.

Buildings insurance will protect your business premises in the case of flood, fire, theft, etc. While your standard home and contents policy might cover some of your business contents, such as a laptop for ‘clerical use’, it’s always best to check and to ensure you have a comprehensive policy to cover everything. 

You could also take out equipment insurance to cover any IT equipment, machinery, or even your trade tools. This can often be added to your existing business insurance products, so check with your insurance broker or provider.  

If you keep stock, either at home or at your business premises, you’ll want to insure it against theft or damage. Your standard home and contents policy won’t cover it. 

Similarly, if you’re transporting your products, goods-in-transit cover will protect you against losses incurred from products lost or damaged during transit. 

Unfortunately, when dealing with customers, not everyone will pay on time. Or, if your client’s business fails, and they are unable to pay, you’ll be left uncompensated. That’s where credit insurance comes in. This will cover a percentage of your costs should a customer fail to pay you in time (or at all). You can tailor your policy to cover certain customers, or all customers. 

We can’t always predict when disaster might strike (take the current situation, for example). Business interruption insurance can cover your business for costs incurred or loss of profits as a result of an unforeseen disaster. 

If an important member of your business falls seriously ill or dies, and this causes your business to suffer financial loss, key persons insurance would cover you for such a loss. This could be the director, or someone with specific expertise that the business cannot run without. 

For businesses that provide advice or certain types of services to clients, professional indemnity insurance is a worthwhile cover to invest in. It will cover you should a client claim for compensation for negligent work or advice, or any mistake made by your company that causes them financial loss. 

This is particularly relevant if you have people visiting your business premises. Public liability covers you for mistakes that cause injury or damage to a member of the public or their property. An example of this is a customer slipping on a spillage where there is no warning sign. 

When you’re employing people, it’s a legal requirement to take out employers’ liability insurance. This covers you for claims made by employees who suffer illness or injury in the course of their work. You’ll need a minimum cover amount of £5m and can be fined for every day you don’t have cover in place.

If one of your products has a defect and as a result, causes injury to someone else or damage to their property, you could be liable. Particularly relevant if your business is in the food and drink or electronics industries. This usually comes under your public liability insurance, so make sure you check your policy.

Other cover you might wish to purchase if you’re self employed is legal expenses cover, which will protect you over any legal costs incurred if a claim is made against you. Another is cyber insurance, should your customer information get hacked, for example.  

When you’re employed, you may benefit from your company’s sick pay policy. But, when you’re self employed, you’ll have to rely on Statutory Sick Pay, should you fall ill. If you end up too sick or injured to work, or you are diagnosed with a serious illness, your business could lose profits and put you in a tough situation. Critical illness cover provides you with a tax free lump sum to cover you and your business if you fall ill (provided the illness is covered in your policy). Common policies will cover illnesses such as cancer, a heart attack or a stroke. 

This type of cover can help you pay off outstanding debt, cover your mortgage and any alterations needed for your home or business such as wheelchair access. 

Critical illness is a worthwhile cover to take out, however it won’t pay out if you die as a result of your illness. Therefore, if you have dependents, you might want to consider taking out life insurance, too. If you die, your dependents will receive a payment to help cover costs such as debts and mortgage payments. 

If, as a result of sickness or injury, your business experiences a loss of earnings, long term income protection will provide you with a payout to help tide you over until you can return to work (or the policy ends). Short term protection, on the other hand, can last between one and two years. Suitable for covering against loss of business earnings due to accident or illness. 

If you’re self employed and unsure which insurance products are necessary for you to run your business, speak to an independent insurance broker for advice and support. Call Dover Street Insurance Brokers on 0208 057 4130 today.