Members of my Facebook group often ask whether they need insurance and which type to get. Because the options can be hard to understand, here is a summary of the various different policy types so you can make an informed decision for yourself. Many sole traders I know don’t have any insurance, but are they making a mistake?
Yup, they are making a huge mistake!
Insurance is a good idea for many reasons but for VAs, in particular, it’s because of the potential damage they could inflict on their client’s reputation and business.
VAs have access to personal data, contact details, intellectual property, cloud storage, bank accounts, social media accounts and even homes. So the potential for a cock-up is relatively high!
Here are a few things to consider:
- What happens if you accidentally delete a client’s entire mailing list or CRM?
- What if you go to a client’s home or office and spill coffee on their laptop or break a piece of original artwork?
- What happens if you post something for your client on social media and it blows up and damages their reputation or results in them being sued by another company? What if the client blames you?
- Many companies won’t use contractors who don’t have insurance.
- Most Associates won’t outsource work to a VA who doesn’t have insurance.
These are the main types of policies and what they cover:
Public liability insurance
This protects you if a client suffered personal injury or property damage because of your business. It covers the costs of subsequent legal expenses or compensation claims and is used by businesses that interact regularly with customers.
You may want to take out this insurance if you go to your client’s offices or homes. It’s relatively unlikely you will do any damage to a client’s property, but you could trip and throw your coffee over an expensive painting or on their computer, for instance.
Professional indemnity insurance
This protects you against negligence or mistakes. Claims can arise from a client who is unhappy with the professional service or advice you have provided and feel they have suffered a financial loss as a result. It will protect you against a client’s compensation claim for negligence or mistakes and covers any legal costs.
This is the insurance I have and if you want peace of mind (especially if you post on social media for your client), this is the one you should get.
PolicyBee’s Virtual Assistants’ Professional Indemnity Insurance package comes highly recommended by my Facebook group and they are the insurance brokers I use myself. UK VAs can use the link to receive up to 10% off their Professional Indemnity insurance.
PolicyBee’s US sister company is InsuranceBee. Unfortunately, I am unable to arrange a reduction for my American readers as referral discounts are regarded as ‘kickbacks’ and are not allowed under US law.
Employers’ liability insurance
You only need this if you employ people but you don’t need this if you are a Limited Company with just one employee who owns 50% or more of the share capital (i.e. you). If you’re a Sole Trader and do not employ anyone, or you only employ close family members, you should also be exempt.
Product liability insurance
You only need this cover if your business involves the sale of physical products to members of the public.
Other types of insurance
Also known as cyber risk, data risk or cyber liability insurance, this is designed to protect businesses who use, send or store electronic data from data breaches – usually caused by malware, ransomware and computer hacking.
If you fall prey to a cyber attack and any data or electronic systems are lost, damaged, stolen or corrupted, the first-party cover usually includes the cost of investigating the crime, recovering lost data, restoring computer systems, reputation management, extortion payments demanded by hackers, notification costs if you need to inform any third parties affected by the incident, and loss of income caused by a business shutdown.
Third-party coverages (that result from claims against you) include damages and settlements, and the cost of legally defending yourself against claims of a GDPR breach.
Income protection insurance
Also known as income replacement insurance or permanent health insurance, this is a type of insurance that will pay you an income if you have to stop working due to an injury or long-term illness.
The amount you can claim will not replace the exact income you were earning before you had to stop work though and you will only receive about a half to two-thirds of your earnings (before tax). You also won’t receive payments straight away and will usually have to wait a minimum of four weeks, although payments can even start up to two years after you stop work.
You can also take out critical illness insurance which can be cheaper and pays out a one-off lump sum if you have a specific serious illness as well as short-term income protection insurance – this also pays out a monthly sum related to your income, but only for a limited period of time (normally between two and five years) and it covers fewer illnesses or situations.
Which policies most VAs have and who they use
A poll of working VAs in my VA Handbookers Facebook group revealed that the majority of them just had professional indemnity insurance but a few had public liability, cyber, and income protection insurance as well.
The most popular insurance companies mentioned were Markel, PolicyBee, Hiscox (who are the underwriters for Policy Bee anyway) and InsuranceBee. Monthly premiums ranged from £9 to £23 a month depending on the cover.
Disclaimer – please note that I am not a financial expert and you should always consult a reputable insurance company to discuss options based on your individual situation and needs.
If you have completed the disaster recovery exercises in my post on how to future-proof your Virtual Assistant business, you will have seen that having insurance can prevent or mitigate the impact of many of the negative events that might befall your business.
Insurance defends you against physical damage and injuries caused by your business, as well as claims of negligence, breach of confidentiality, dishonesty, libel and slander.
So, in response to the title of this post, yes, Virtual Assistants should definitely have insurance!
* I am an affiliate for PolicyBee which means I receive a small commission if you buy from them. I use PolicyBee for my own insurance and only recommend companies or products that I know and trust.