Why business insurance should be a top priority for the newly self-employed

Insurance is one of the most important things to consider when you start working for yourself.

Read our business insurance 101 for the newly self-employed to make sure you’re protecting the enterprise you’re working so hard to build.

Starting a new business can be as challenging and all-consuming as it is exciting and liberating.

With so much to think about, you might be tempted to push business cover down your priority list – but never underestimate the importance of insurance.

With this in mind, we’ve put together a handy guide to help you work out the type of covers you might need.

What affects the kind of business insurance you might need?

Lots of factors can affect the types of cover to consider when starting out in business, including (but not necessarily limited to):

  • whether your business provides advice or professional services
  • where you run your business from
  • whether you need equipment to run your business
  • whether you employ people to help you run your business

Why should the self-employed consider business insurance?

Taking the leap into self-employment can be a big deal – most people who set up their own business don’t take the decision lightly. There’s often a lot riding on the new venture, including considerable time and money.

So when you’re pouring your heart and soul into a project, why put it at risk?

Why insurance is important for business

Accidents, mistakes, and unforeseen events occur in life, and you can’t stop every single one of them from happening. However, you can take steps to protect your business if the worst does happen.

Insurance can be the difference between staying afloat and going under if a mistake or accident stands in the way of you trading. Here are a few questions to answer when you’re deciding on the types of cover you might need.

1. Do you work on others’ premises or have visitors to your premises?

Yes? Then public liability insurance is likely to be the first type of business cover for you to consider.

It can cover you if a client, supplier, or member of the public makes a compensation claim because they’ve suffered personal injury or property damage because of your business.

2. Does your business provide advice to clients?

If you provide advice or a professional service to clients, you may want to consider taking out professional indemnity insurance. It can cover you if a client makes a compensation claim because they’ve suffered a financial or professional loss because of your business.

Professional indemnity insurance is also worth considering if you handle data or intellectual property belonging to others.

3. Does anyone else work for you?

Whether you take on permanent or short-term staff members, casual workers, or contractors, the law states that you must have employers’ liability insurance. This can protect you if an employee becomes ill or gets injured as a result of working for you.

There are a few exceptions, which you can read more about on our employers’ liability insurance page.

4. Do you have business premises?

If you’ve set up your business working from designated business premises, there’ll be other important covers for you to consider. The list of optional covers includes:

  • Business contents – this can cover you if your business equipment or furnishings are lost, stolen, or damaged
  • Business buildings – this can protect you if your business premises are damaged or destroyed

5. What other important business covers should newly self-employed people consider?

Business legal protection can cover you if your business incurs legal expenses or prosecution fees. This might be for things like an employment tribunal, an HMRC tax investigation, or a civil action brought under the Data Protection Act.

Business interruption insurance is another cover you might want to consider when you’re setting out as self-employed. It’s there to protect you against crises that might otherwise force you to stop trading – and any gap in trading could put a small business under.

Read more about other types of self-employed business insurance you may want to consider.

What other small business tips would you like to hear from us as you grow your new business? Let us know in the comments below.

Ready to set up your cover?

As one of the UK’s biggest business insurance providers, we specialise in public liability insurance and protect more trades than anybody else. Why not take a look now and build a quick, tailored quote?

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