Self employed people and those starting a new business may over look insurance or be unsure of what business insurance is required. This article is for guidance, it does not constitute comprehensive legal or business advise. A professional insurance broker or insurance company will be able to offer more details.
What is Self Employed' Public Liability Insurance?
Public liability insurance covers self employed people and businesses in the event of a claim by a customer or other member of the public. The claim may be for causing injury, death or damage to property due to accidents or negligence. The public may be customers, clients and people that have no involvement with the business, such as neighbours, onlookers, visitors to the client, or passersby. Public liability insurance can cover a business if there are problems with a product or service which it has supplied, designed or manufactured.
Insurance for Small Businesses & Sole Traders
Business Insurance is a generic term which refers to a package of insurance which may be useful to a business of self employed person. The only insurance which is required by law is Employer's Insurance if there are employees and motor vehicle insurance if applicable.
Other insurance may be compulsory because of contracts which the business enters into, some examples are:
- some clients will require public liability insurance,
- if there is a mortgage secured on a property then buildings insurance may be required,
- insurance may be required to cover hired equipment.
How Much Does Public Liability Cost?
Insurance companies will ask different questions, offer different benefits and set various limitations so it important to shop around and understand the differences between insurance policies on offer. Prices for insurance will be based on the perceived risk of a claim and the possible value of the claim. Many sole traders will find insurance for their business for less than £100 per year. Payments by installments will often be possible.
Public Liability Insurance & Bankruptcy
Some insurance companies will not offer insurance to a person who has been bankrupt, other companies will increase the cost of the insurance (possibly by 15%), whereas other insurance companies will not ask about bankruptcy or insolvency. A new limited company will have a greater choice of insurer and bank if the directors do not have a history of insolvency.
Business Insurance for the Self Employed Working From Home
The factors to consider are:
- home insurer should be informed, might need to reflect the work,
- whether clients come to the home.
- is valuable or dangerous stock or equipment stored at home?
- does the self employed person work at premises belonging to clients (e.g. such as mobile hair dressers or tradesmen)?
Do the Self Employed Need Public Liability Insurance?
It is not mandatory but buying public liability insurance is a sensible precaution for most self employed people who would have to meet the full cost of any claim and may face financial difficulty or bankruptcy without it.
The article about Construction Trade Public Liability Insurance may also be useful.
Sources:
The Association of British Insurers
Deborah Percy - BSc. MA. Managing Director of a heating & plumbing business. Interest in maths, science & research. Mother of 3, including twins.
Join the Conversation