You’re a sole trader if you run your own business as anindividual, and you’re self-employed. Contractors can also be self-employed,but as they get their work through limited companies, they don’t qualify assole traders. Sole traders are totally independent. You get to keep all yourprofits after tax, but you’re also personally responsible for any losses yourbusiness makes. You can read aguide to setting up as a sole trader here.
So being a sole trader brings a lot of freedom, and it canpotentially be highly lucrative. But it also brings a lot of risk and obligations.And that’s why it’s vitally important that all sole traders get the insurancethey need.
This is your essential guide to your insurance requirementsas a sole trader. We’ll outline the sort of cover you’ll need to get foryourself, and the sort of cover your clients might expect you to get beforethey agree to work with you. We’ll also explain how to get the cover you need.
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Insurance Requirements for Sole Traders – What’s Requiredby Law?
The sort of insurance you get as a sole trader will dependon who you are and what you do. A freelance IT consultant probably won’t havethe same insurance needs as a freelance painter or decorator. But some types ofinsurance are required by law.
The main thing to consider is Employer’s LiabilityInsurance. The Employer’s Liability (Compulsory Insurance) Act came intoforce in 1969. If you employ any staff – even if it’s just one or two people –you’ll need this sort of cover. It covers potential costs and legal fees if anemployee or ex-employee makes a claim against you for bodily injury sustainedon the job. Learnmore.
Insurance Requirements for Sole Traders – What Will YourClients Want You to Have?
Some clients may refuse to work with you unless you canprove you have certain types of insurance cover.
Public Liability Insurance covers you if a customer,or a member of the public, injures themselves or damages one of theirpossessions while they’re on your property. It will also cover you if you damagesomething that belongs to your customers while visiting their premises.
It’s easy to imaginethe sort of scenarios where this type of cover might come in handy for soletraders. If you’re a painter and decorator, you could accidentally drop a tinof paint on your client’s floor. And even if you’re a freelance IT consultant,you might spill your coffee on your client’s laptop.
In both cases, public liability insurance would cover anylegal costs and financial compensation. That’s why some clients may refuse tolet you onto their property unless you can prove you have public liabilityinsurance. Learnmore.
Professional Indemnity Insurance covers you if aclient alleges that you’ve made a mistake in your work. This could be anything,from bad advice to inadequate services or poor design choices. If your client’snot happy, or if they feel they could make a financial loss as a result of yourwork, they could seek damages.
Professional Indemnity Insurance will cover the costs ofyour legal defence, as well as any financial compensation your client may bedue. And once again, certain clients may refuse to work with you unless you canprove you have Professional Indemnity Insurance. Learn more.
When you take out Professional Indemnity Insurance, you’llhave the option to take out additional Legal Expenses cover. This willprotect you from various legal issues that would not be covered by standardProfessional Indemnity Insurance, including tax investigations, loss ofearnings, identity theft, and employment disputes. Learn more.
Insurance Requirements for Sole Traders – What OtherTypes of Cover Should I Consider?
Certain types of sole trader work are inherently risky. Soall sole traders should consider taking out Personal Accident Insurance.It will cover you for most accidents and injuries that happen by chance, andwhich could not be predicted. That way, if you’re ever put out of action for anextended period of time, you won’t have to worry about any loss of income. Learn more.
Almost all sole traders work with computers, and we’re allvulnerable to hackers and cyber-attacks. Cyber Breach Response Insurance willgive your sole trader business essential online protection. If your system’shacked, or if you suffer a data breach, we’ll cover the cost of getting yoursite and your systems back online. Learn more.
And speaking of computers, for most sole traders, the toolsof the trade are very much your livelihood. If anything ever happens to yourgear, whether it’s lost, stolen or damaged, will you be able to continueworking? That’s why it’s a good idea for all sole traders to take out ContentsInsurance. It will reimburse you for the cost of replacing or repairingyour equipment. Learnmore.
Want A Quote on Your Sole Trader Insurance?
We offer the cover you need from as little as 35p a day, with no hidden fees. You get to tailor your cover to suit your exact requirements, so you won’t pay for anything you don’t need. You can specify the precise length of your cover, from a matter of days to months or a year. And you can get a free quote online in a matter of minutes. Head here for more information.
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If you need help and support in gettingyour insurance please contact us at info@tapoly.com
