A guide to insurance for freelancers

So, you’ve set out on your own path to employment and are enjoying the benefits of freelance working. You’re able to be your own boss and choose what you work on, when you work and how much you charge.

Whilst freelance working brings many benefits, you also have more responsibilities as the person solely responsible for your business. These additional responsibilities include taking care of the administrative side of your enterprise, from issuing invoices to your clients to purchasing the equipment that helps you do your work.

An admin task that is often forgotten, or one that can seem prohibitively complicated, is purchasing business insurance. If you’re an experienced freelancer, or just looking to get set up, this article with our friends at Superscript explains all you need to know about insurance for your business. Let’s tick getting insured off your to do list.  

Why is it important to get insurance as a freelancer?

All businesses will face some level of risk, and freelancing is no different. There are two main reasons insurance is important if you are freelancing.

1. Your exposure to the cost of a claim - Whether it’s a claim against you, or a claim you need to make, the cost of any such claim will likely far outweigh the amount you spend on purchasing your insurance. If you are entirely reliant on your own income, having business insurance in place could actually save you money in the long run.
2. Requirements from clients - Depending on the type of freelance work you carry out, you may find some clients require you to have adequate insurance to enter into a relationship; likewise, if you join a freelance job platform you may find that your membership requires you to have certain covers in place.

It’s worth noting that the only insurance that is mandatory in the UK is employers liability insurance, whilst it’s less common in the world of freelancing if you employ any staff you’ll need to take out this cover. You could be fined if you don’t have it in place.

What insurance do freelancers need?

Whilst the insurance you need will in large part be dictated by what type of freelance work you do, there are some common covers that most freelancers will consider purchasing.

Professional indemnity

Professional indemnity is particularly important for freelancers who work contractually and provides legal and compensation cover for the professional services you provide, including advice and consultancy. This cover protects against claims like breaches of contract and acts of errors or omissions.

Public liability

One of the most popular covers for freelancers, public liability covers legal and compensation costs if a member of the public – including a client – is injured, or their property damaged, due to your business’s negligence. Even if you work from home as a freelancer it’s worth considering, if you travel to client meetings or work from coworking spaces for example.

Business equipment insurance

You rely on equipment to do your work, from essentials like phones and laptops, to expensive specialist equipment such as cameras. Business equipment cover protects this essential equipment against loss, damage or theft.

Cyber

An increasingly essential cover, particularly if you work with personally identifiable information (PII), shared by clients for example. Cyber liability is designed to cover risks that come with storing and handling this data, such as accidental privacy breaches, hacking and cybercrime and business interruption as a result of a cyber security breach affecting your systems or those of your suppliers. Want to learn more about how to stay safe online as a freelancer?

Legal protection insurance

Unlike large companies who have in-house legal teams, being self-employed means you may not have the same access to specialist legal support. Legal protection insurance provides this access, a lifeline if you ever face a legal dispute or have questions about tax issues, such as IR35.

Depending on the nature of the freelance work you carry out, there may also be other covers to consider to protect your livelihood.

Remember, business insurance is tax deductible

All business insurance premiums are considered as an 'allowable expense' for freelancers by HMRC, meaning that you can write off the cost of your premium against your taxable income in your self assessment tax return. You’ll just need to remember to keep a record of your payments as proof.

What to look for in an insurer

When choosing an insurer there are a number of factors you should consider to help you decide on the best fit for your needs, these include:

• Reviews - as with any purchase, reading reviews from customers like you is a helpful way to assess the strengths and weaknesses of an insurer.
• Regulation - insurance brokers in the UK are regulated by the Financial Conduct Authority (FCA) and you should be able to find evidence of this on an insurers site. The financial strength of an insurer will also give an indication of their ability to pay claims.
• Contact and support - it may be useful to understand how you can contact your insurer, particularly if you’d like the ability to speak with someone directly as some only offer online options.
• Products - some insurers will bundle up policies while others offer more tailored cover. It’s also important to understand any fees that may be applied if you take certain actions, such as cancelling early.

What information do you need to get covered?

Getting insurance cover for your business is usually not as complicated as it seems, often you can get a quote and set up your cover online in a matter of minutes.

To complete a quote for insurance you’ll typically need some information about your freelance work to hand, including the nature of the work you do, where you work and how much money you expect to make in the next 12 months.

Depending on your answers to these questions, there may be some other information required to get the right cover for your needs. You can find out more about getting the right cover for your business here.

This content was created on 1st June 2022

Please note, the content in this article has been provided by a 3rd party and is not guidance from Cashplus. Cashplus Bank make no representations or warranties of any kind, explicit or implied with respect to the contents of this article. Without limitation, Cashplus Bank specifically excludes and disclaims all express or implied warranties and conditions to the extent permitted by law, and any action taken using such content is strictly at the user’s risk.