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Do I Need Public Liability Insurance If I’m Self Employed?

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Public liability insurance is needed for some self-employed people but not others. The product protects the self-employed if they are held accountable for a customer or other third party’s injury or property damage. Therefore if a business or its staff have face-to-face contact with customers, suppliers or others, self-employed public liability insurance is essential.

But why is this essential? Well, there were more than 72,000 public liability claims made in the UK in 2019/20, according to the Government’s Compensation Recovery Unit. There was also £6.641 million in compensation claims paid out in the same timeframe. Public liability insurance is one of the most common business insurance policies for a reason. And with self-employed businesses not enjoying the same financial protection as limited companies, it is even more important to consider public liability insurance if working with members of the public.

Yes, public liability insurance is not needed for every business, but when deciding whether it is the right choice, a self-employed business owner needs to consider questions such as:

  • Do they work with members of the public?
  • Do they work in customers’ homes?
  • Do they have a place of work (even if it is their home) where customers/suppliers/vendors visit?
  • Do they work in public places, such as a park, the street, an event venue, where a member of the public could accidentally become victim to injury or property damage?

If yes to any of the above, it is probably worth the business taking out a public liability policy. Anyone who is unsure can speak with a specialist business insurance broker or a business insurance company.

Public liability insurance is not technically a legal requirement. However, some industry bodies also require it as part of the terms of their membership, while some clients may demand it is held as part of the terms of a contract.

What is public liability insurance for the self employed?

Public liability insurance for self-employed businesses is the same as it would be for any other business or organisation. It covers compensation claims and associated legal costs from disgruntled third parties who allege the self-employed worker/business is to blame for their injury or property damage.

Compensation could be sought for a variety of reasons such as loss of ability to work, remuneration for trauma or even death. Still, more specifically, it can cover medical and repair bills. The insurance policy also pays for legal costs in defending against a claim even when the self-employed business is not to blame.

How much is self-employed public liability insurance?

The cost of self-employed public liability insurance is likely to be cheaper than bigger businesses as the scale of work carried out, and the risks will usually be smaller. But it depends a lot on the level of cover wanted, where work is carried out, number of employees, and the type of industry. Claims history also plays a part.

Public liability insurance is usually sold with cover between £1 million and £10 million.

The average cost of public liability insurance for a small business wanting a £2 million cover is thought to be about £118 a year, according to research by insurance experts NimbleFins. However, this could be less for a self-employed business as it usually works on smaller projects with fewer employees. The research, when considering the same criteria but different levels of cover, found quotes for about £106 for £1 million cover, and £140 for £3 million cover.

It is worth shopping around for a quote. Prices can be variable in the marketplace as sometimes insurance companies will base their quotes on the amount of risk they have already taken on. For example, if they have taken on a lot of builders lately, they may charge a higher premium for another builder’s policy simply because they have already taken on a lot of the same type of risk.

Discounts can also sometimes be applied if paying upfront rather than in instalments.

Other types of self-employed business insurance ­

Self-employed business insurance can be as comprehensive or limited as desired. The only legally required business insurance is employers’ liability insurance if the organisation has people working for them. But other than that, it is a decision to be made by weighing up the risks and costs of an incident depending on how the business operates.

Other types of self-employed business insurance are:

Professional liability insurance: If a business sells its advice, services, or expertise, it could cause a client to lose money based on bad decision making or instruction.

Product liability insurance: Similar to public liability insurance, this funds compensation and legal costs if a product the business sells causes injury or property damage.

Business use car insurance: When a vehicle is used for business purposes, an incident will only be covered if business use insurance is purchased. Otherwise, the self-employed business owner is essentially driving uninsured.

Employers’ liability insurance: This is needed for additional staff hired by the self-employed business owner. There are some exceptions, such as some freelancers or fellow self-employed workers.

Contents insurance: If using expensive equipment, contents insurance can cover accidental damage, loss or theft of these items. Stock cover is usually an add-on to contents insurance.

Cyber insurance: If using computer networks or handling a lot of personal data, such as when taking card payments, cyber insurance is useful in case of hacking, loss of data, cyber extortion, viruses etc. It also pays business interruption if a computer issue means the business cannot trade.

Legal expenses: This may be needed for debt collection, contract disputes, tax investigations and more.

Personal accident: Paying a benefit either in a lump sum or weekly if an accident at work leaves the self-employed business owner unable to work. While employers’ liability insurance covers people hired by the business, the owner themselves is not protected. So this can be a lifeline if the business owner is hurt.

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