Self-employed income calculator

Scrimping on insurance doesn't pay

There are many reasons why self-employed people may opt to forego business insurance. This could be due to financial constraints, worries about irregular income (and therefore seeing insurance premiums as an additional financial burden), or a lack of awareness about how important business insurance is. Underestimating the risks associated with the profession or overestimating the ability to weather potential setbacks can also lead to some forgoing insurance as a cost saving measure.

However, it's crucial for self-employed people to consider business insurance due to the inherent risks associated with the nature of self-employment. Without insurance, self- employed people are vulnerable to financial devastation in the event of accidents or allegations of negligence. Insurance provides a safety net, offering protection against unexpected expenses and liabilities safeguarding both personal and professional assets. Moreover, it enhances credibility and peace of mind, allowing freelancers to focus on work without worrying about any potential financial setbacks.

What kind of insurance should self-employed people be considering?

Knowing the insurance you need to provide your business with the correct level of protection can be half the battle. Here's a list of what kind of self-employed insurance might be right for you:

• Public Liability Insurance

  This type of insurance is not legally required for most businesses, but it is considered necessary if you have any interactions with third parties or visit client. It covers claims for personal injury or property damage that a third party suffers while on your premises or due to your business activities.

  It is worth considering this type of insurance if you're a:

  Tradesmen who works on construction sites or in clients properties, e.g. if you were working in a client's property and caused damaged to their home, you would be covered.

  A contractor who meets clients at their premises, e.g. If you knocked a cup of coffee over client's laptop.

  A private tutor whose clients come to their premises, e.g. If a student slips on a wet surface and injures themselves.

• Professional Indemnity Insurance

  This insurance is essential for self-employed professionals who provide advice or services to clients. It covers legal costs and compensation claims if a client alleges that your work has caused them a financial loss.

  It is worth considering this type of insurance if you're a:

  Business consultant who provides professional advice to a client, e.g. if a client implemented a business strategy that you created, and it resulted in a financial loss, your may pursue you for those losses.

  Design engineer who provides designs to clients, e.g. if an error is made in designs for a client, and it resulted in a costly delay to the project, your client may hold you responsible for the costs.

• Employers' Liability Insurance (if applicable)

  If you have employees, this insurance is a legal requirement. It covers the cost of compensation for employees who are injured or become ill as a result of their work.

  See below for a few examples;

  An electrician whose employee suffers a head injury from loose building materials whilst working on site

  A painter and decorator whose employee suffers a broken arm after falling off a ladder

• Tools Insurance

  This type of insurance covers the cost of repairing or replacing business equipment and tools if they are lost, stolen, or damaged.

  See below for a few examples;

  A tradesperson whose tools are stolen whilst in the middle of a job, despite taking the correctmeasures of ensuring their secure storage.

• Portable Insurance

  This type of insurance covers your work equipment against loss, theft and accidental damage, when working away from home

  A few examples below

  An IT contractor travelling to a client's premises for a meeting accidentally leaves their bag on the train, resulting in them losing their laptop

  A wedding photographer has their camera equipment stolen whilst taking photographs of guests

It's not all doom and gloom

Despite the myriad of fundamental challenges in the self-employment sector, a resounding 92% of individuals remain committed to the freelance lifestyle and intend to stay self- employed. This steadfast determination highlights the allure of autonomy, flexibility, and fulfilment that self-employment provides. And outweighing the obstacles encountered along the way, even ones as big as financial insecurity. The primary motivation for two-thirds of individuals to become self-employed was the desire to ?be their own boss?, showcasing a strong desire for independence in shaping their professional futures.

Additionally, flexibility emerged as the second most significant reason, with 55% citing it as a main consideration. So, work-life balance and a less rigid structure is something that features high on the priority list that's worth giving up the other benefits that come with full-time employment. And for just over a third of respondents, escaping traditional employment systems and pursuing passion were driving factors in their decision to embrace self-employment.