Do I need insurance as a freelancer?

Yes, if you`re a freelancer you need insurance to protect yourself from a number of risks. Without the security of being an employee for a company, you could be financially vulnerable. There are different types of insurance for freelancers which you should know about to help you decide which is appropriate for you, as insurance needs vary from one freelancer to the next.

Why insurance is important as a freelancer

Insurance can be essential if you`re working as a freelancer, as you face lots of potential risks. It’s not something you would have to think twice about if you were an employee, but the right insurance policies can help protect you from these dangers.

This could include the loss of essential equipment you rely on to work due to theft. Without insurance, you may have to recoup the cost yourself. With the right contents insurance policy in place, you could receive a pay-out to fund a replacement.

Or if a client claims you gave advice in negligence, you could be sued. Paying for legal defence costs in the thousands, and in the worst case, paying compensation would add even more to that cost. But professional indemnity insurance could help pay for this.

While you may think you have enough on your plate, freelance insurance could be the best business decision you make. When you really need it, you’ll be glad that you have it.

Types of freelance insurance

Depending on if you work alone or the type of work you do, every freelancer faces their own risks. According to NimbleFins, here are the most popular types of business insurance for freelancers.

Public liability insurance

Public liability insurance is critical for freelancers who deal with the public, such as clients or customers. This type of insurance can help you protect against claims of accidental damage as well as injuries in relation to your work.

Even if you`re based at your home office, a visiting client tripping over some work equipment is all it takes. The client could blame you and sue you, which is expensive to defend. Here, public liability insurance can protect freelancers by covering both legal expenses to defend your business, as well as cover compensation claims if you’re found liable.

Product liability insurance

Product liability insurance protects freelancers against claims of bodily injury or property damage, due to the products you manufacture and sell. Like with public liability insurance, product liability cover can protect against the cost of legal action and cover compensation claims if you’re found liable.

Professional Indemnity Insurance

Professional indemnity (PI) insurance protects freelancers who sell advice or other professional services. If a client you worked for faced financial loss and decided to blame you for negligence, you could be sued. But, professional indemnity insurance can help cover the cost of legal bills if you need to defend against a claim.

Employers` liability insurance

If you’re self-employed and employ some other workers, even if they`re temporary or casual workers, then you will legally need employers’ liability insurance. This type of policy protects you if any employees are injured or become ill in the line of work.

Contents insurance

Contents insurance can be very important for freelancers, as it protects your essential work equipment from theft, accidental damage, or loss. Each policy is different for what it covers, but if you do face one of the covered events, contents insurance can help you get back up and running by paying for a replacement.

Using your car for business

If you use your car to meet clients or travel for work purposes, you should declare your business use with your car insurance provider. It’s important to note that failing to declare your car for business use could make your insurance invalid.

Tax investigation & Legal expenses insurance

Whether about tax or legal disputes, these policies can protect against potential investigations from HMRC, as well as contract disputes and debt recovery. In these cases, the policy could provide you pay legal costs.

Cyber insurance

Cyber insurance can be very important for any freelancer using the internet for work, as anyone can be a cybercrime victim. If you are hacked or have customer data stolen, it’s essential to have insurance should you suffer financial loss.

Personal accident insurance

With no sick pay as a freelancer, personal accident insurance will help ensure you have an income if you can’t work due to injury. With pay-outs often in the form of either weekly or lump sums, it’s a very important policy type to consider if you want income security.

What happens if you have no public liability insurance?

If you don’t have public liability insurance and you`re blamed for personal injury or property damage, you could be sued. Public liability insurance is critical for freelancers who deal in-person with members of the public, such as customers or clients.

It’s expensive to pay for a legal defence, not to mention the cost of a claim if they’re successful, which could be thousands of pounds. For many freelancers this could be a financial disaster.

This is why public liability insurance is one of the most important types of insurance for freelancers. With a policy in place, legal expenses could be covered as well as compensation claims if you’re found liable. While a legal claim is still an unsettling process, having public liability insurance can be invaluable for both your peace of mind and financial security.

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