People often ask whether they should take out business insurance and, although I usually direct them to various online articles (because well, that’s why Google exists!) I thought I should cover it on my website too. Many Sole Traders I know don’t have any insurance, but here’s a summary of the different types so you can make an informed decision for yourself.
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 this if you go to peoples’ offices or homes a lot and think you may accidentally burn them down.
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 could protect you against a client’s compensation claim for negligence or mistakes and cover any legal costs.
Professionals who may need this insurance include IT Consultants, Architects, Business Management Consultants, Engineers, Project Managers and Financial Advisers.
It is highly unlikely anything you do would destroy a clients’ business but if you want peace of mind, then this is the one to get.
Employers’ Liability insurance
You only need this if you employ people but you don’t need this if your Limited Company has 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.
Products Liability insurance
You only need this cover if your business involves the sale of products to members of the public.
If you do want to get insurance and are still not sure which one to choose, I recommend you do some more research or ask HMRC or an Accountant for more advice on which type you should get.
Which one most VAs have and who they use
A recent poll in my Facebook group revealed that most members had professional indemnity insurance and some of them also had public liability, cyber and data risk insurance.
Popular insurance companies mentioned were Hiscox, Policy Bee, and Markel (who apparently have lots of really good templates and documents and a great helpline) and their monthly premiums ranged from £16 to £23 a month.
This information can be found in the Legal, Insurance and Company Entities Unit of my VA Handbookers Facebook group.