Now, we're aware that the question 'what insurance do freelancers need?' isn't at the forefront of every freelancer's mind. Also that researching and buying insurance isn’t most people's idea of fun. But it is necessary.
Why is it necessary? Because as a freelancer, being the little guy gives you freedom, sure. But it also makes you vulnerable.
Freelance numbers in the UK are edging up, too. IPSE (The Association of Independent Professionals and the Self Employed) put the figure at about 2.2 million in 2020. Over 1.9 million were said to be doing freelance work as their main job, while for a further 239,000 it was a side hustle alongside other employment.
And that was pre-Covid. So, who knows how many more people have since turned to freelancing and self-employment, maybe as a result of losing their job during the pandemic. And how many others with time on their hands have discovered a freelance sideline that they aim to continue even after their usual work resumes?
As with most things, freelancing comes with a degree of risk. And making do without the security of an employer means you need all the help and support you can get. Getting that support isn’t as complicated or as expensive as you might think, however. It’s all about knowing the particular risks you face and doing something about them.
So, let’s start with the basics of what insurance freelancers need.
What insurance do freelancers need?
Freelance professional indemnity insurance
Freelancers' professional indemnity insurance protects you against claims of negligence made by dissatisfied clients. That's basically people saying you didn't do the job you were being paid to do or didn't do it well enough.
Unfortunately, that happens more often than you might think.
If you’re in dispute with a client over the work you’ve done for them, professional indemnity covers the cost of defending any allegations or actual claims made against you.
Your insurer pays to fix your mistake (if there is one) and/or pays compensation or damages to your client on your behalf.
Can you do without it? Well, a solicitor can do some of the legal legwork for you, but they’re not exactly cheap. A few hours of their time can cost you more than an annual freelancers' professional indemnity insurance policy.
And if a court decides there's compensation to pay too, it'll have to come out of your own pocket if you don't have insurance.
Freelance public liability insurance
This one covers claims against you for bodily injury and/or physical damage to property. It's especially useful if you’re clumsy or if your visitors turn out to be accident-prone.
The thing is, if you go out and about to clients’ offices or they visit yours, and there’s an accident that’s your fault, you can be held liable for any damages. That can be in the shape of an injury to someone or damage to their things - their top-end laptop for example.
Happily, if the person affected claims against you, public liability insurance covers the cost of your day in court and any compensation you have to pay.
Employers’ liability insurance
This is the only business insurance that's required legally. By law, every limited company in the UK with one employee or more has to have a minimum of £5m cover (although most insurers only offer £10m).
It covers claims made against employers, by employees, for injuries and illnesses sustained at work.
So why is that relevant to freelancers, who mostly work alone? Well, strictly speaking, it isn’t. However, it’s not unusual for a client to request employers' liability insurance as a contractual requirement. So it’s a good idea to know what it is and what it covers.
And if you ever reach the stage of directly employing someone to help with your freelance work, you'll definitely need it. Because who's to say your solo success won't eventually see you as the boss of your own freelance agency?
Office and property insurance
Pretty self-explanatory, this one.
Office and property insurance covers the stuff you use to do your freelance work, which ordinarily means the things in your office (desk, chair, PC, printer, plants, books etc). If what you do takes you out and about, you'll want to supplement it with portables cover for the technical kit you carry around with you (laptop, mobile, tablet etc).
This type of cover pays for your equipment to be repaired or replaced as new should it be stolen, lost, or damaged, with scope for hiring equipment temporarily in the meantime. That way it allows you to carry on working.
Cyber insurance for freelancers
Cybercrime is a potential problem for everyone these days, not just the big boys. Hackers don't really care who they catch out as long as there's something in it for them: a ransom maybe, some data to steal, or even just the kick of messing up someone else's life.
A cybercriminal infiltrating your systems can cause a lot of damage. They can lock your files, syphon off sensitive information, bring your websites down and generally cause havoc. The kind of havoc that stops you from doing your job and can put you in big trouble if data is stolen and it belongs to your client
Cyber insurance can't stop you from being targeted, but it can help clear up the mess. It provides technical expertise to stop an attack and retrieve data, as well as restore systems and websites. It also pays legal fees and covers any compensation if you're sued for losing sensitive information.
Legal expenses insurance
This is a really helpful type of insurance that can be added onto a public liability, professional indemnity, or employers’ liability policy.
Legal expenses insurance is there to support you with financial issues, contractual disputes, and tax or health and safety problems.
As a freelancer, you probably have contracts with your clients. Professional indemnity insurance will cover you for claims of negligence, and other more serious offences that arise from your agreement. But what if they simply refuse to pay you? With legal expenses, you’ll have access to legal advice, and you’ll be compensated for any losses.
Working out all the rules and regulations around tax, and health and safety, can be a real headache. Even with the best of intentions, mistakes can be made. And that can land you in trouble with HMRC or the HSE. Legal expenses will pay to defend you and sort things out.
As a freelancer, it's you who makes all the decisions. What type and how much freelancer insurance you get is up to you too. But just remember on that rainy day when something's gone horribly wrong (which may never happen but just as well might) that opting to protect your livelihood with freelance insurance was perhaps one of the best decisions you made.
We have lots more info to help you decide what freelancer insurance you need. Or ring 0345 222 5391 for advice from a friendly expert.
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