Taking the plunge and becoming self-employed is a highly satisfying achievement, which reaps a whole host of benefits. Not only do you have the means to be able to work as many or as little hours as you would like, but it is largely a way to earn more money than if you were employed by a company – especially as you become more established in your field.

Getting to determine your own work/life balance is one of the biggest draws for becoming self-employed. Many people ditch the 9-5 lifestyle for something that can feel a little more free. As a contractor or freelancer, your hours are determined by you, which is something that many people enjoy.

Being a freelancer or a contractor carries a financial risk, and it also carries certain legal responsibilities alongside that too.

But what can you do to protect yourself should things go wrong?

We partner with Qdos, providing award-winning protection for your limited company that makes insurance simple. Deciding what type of insurance you need as a freelancer depends on a number of factors. The level of cover and the type of insurance usually depends on the client or agency.

Clients can claim against you if you make a mistake that will cost them financially. Although this is fairly rare, it is something that you need to foresee, as if someone were to claim against you for a mistake or negligence, it can be very expensive. Being the owner of a company means that you have to be prepared to face risks and come under scrutiny.

Relevant business insurances include Professional Indemnity, Public Liability, Employers Liability, Personal Accident and Contractor Sickness Fee, and the vast majority of clients will legally require you to be covered. Having certain insurance in place can protect you and provide you with peace of mind.

Professional Indemnity

(From £13.50 per month)

Professional indemnity insurance protects your business against loss or damage if a client or third party makes a claim against you. This could be as a result of the impact of negligent services or an error in the services provided by your business. It is designed to safeguard you as a professional, and cover the cost of putting things right, including any legal fees.

Compensation claims can be brought against you even if you provided a service or offered advice for free. Any organisation providing a professional service or giving advice could be sued if the recipient is unhappy.

It is not a legal requirement to have professional indemnity insurance, however if your profession is deemed as high risk, then it may be requested. This could be by professional bodies, clients, or government, and they could ask that you have a minimum level of cover before allowing you to operate with them.

Public Liability

(From £4.58 per month)

Public liability is a type of business insurance that is in place to cover any compensation or legal costs needed if a third party (customers or members of the public) claims they are injured or have had property damaged as a result of your company’s services.

This incident can happen on your own premises, or in the public when you or your employees are out and about. Having public liability insurance in place can help to protect your business from incurring any unforeseen costs should an accident happen.

Employers Liability

(From £4.58 per month)

Employers’ liability insurance covers the cost if a situation arises where an employee makes a compensation claim regarding injury, illness or accidental death through working for your company.

If you are an employer, you are legally obliged to have employers’ liability insurance in place and can be fined every day that you do not have the appropriate insurance. There are only 2 scenarios in which you are not required liability insurance – if you have no employees, or if you are a family business who only employs family members.

It is important to ensure that your policy covers claims brought by contract, casual, seasonal and labour-only employees, as well as all permanent employees. An employee is anyone who has NI and tax contributions deducted from their salary and whose location, hours and conditions are controlled by their employer. It is also important to cover any temporary staff, such as work placements, volunteers and advisors.

Personal Accident

(From £4.68 per month)

If you or an employee cannot work due to a bodily injury following an accident, personal accident cover provides a lump sum payment. It provides 24-hour protection, so the injury can happen at work or outside work in their own time.

The bodily injury can be caused by an accident that permanently or temporarily prevents an employee from working.

The Health and Safety Executive 2021 annual report found that 0.4million non-fatal employee injuries and 142 fatal accidents were reported by employers. Although you may think that an accident is unlikely to take place in your workplace, some things are beyond your control, and having personal accident insurance in place can help with much needed financial assistance.

Contractor Sickness Cover

(From £26.31 per month)

For many contractors, not being able to work due to sickness is a huge financial worry, as they have no security elsewhere. Contractor sickness cover provides a monthly benefit if disease, sickness, or bodily injury prevents them from undertaking their normal occupation.

It is designed specifically for contractors. It also provides a lump sum payment in the event of accidental death. However, any claim arising from a pre-existing condition would not be covered by the contractor sickness insurance policy.

Insuring a Limited Company

When you set up a limited company, looking into the different types of insurance for your business should be high on your priority list. At Gorilla Accounting, we can look into your options and advise what insurance you should have in place, using our partnership with Qdos to ensure your business and its employees are protected.

You can learn more about our insurance offering here. If you need any further help, our team of expert accountants are on hand to guide you.