A challenge freelancers face is knowing what type of insurance they need to have. We demystify the common types of cover.
Don’t know what insurance you need as a freelancer? There are three key covers for businesses in the UK. They are:
- Professional indemnity insurance
- Public liability insurance and
- Employers' liability insurance.
What is Professional Indemnity Insurance for freelancers?
Professional indemnity is the most popular cover amongst freelancers (and it's our speciality).
It covers a broad range of scenarios which are applicable to freelancing in the digital and creative sector, but we like to simplify things by thinking of it as insurance for careless mistakes and problem clients.
Think mistakes in your code, unhappy clients, copyright infringement, breach of contract. The list goes on.
It’s increasingly common that clients contractually require a freelancer has professional indemnity insurance. Even if it isn't a contractual obligation, every freelancer has a responsibility to deliver work to a reasonable timescale, meet client expecations and provide work to a certain standard. These are the situations that insurance can help you with if they don't go to plan.
If you provide a professional service to clients or offer advice, you should consider this cover.
Cost: Expect to pay around £168 annually for professional indemnity.
Do freelancers need Public Liability insurance
Public liability covers compensation for injuries sustained on your business premises, or if you cause damage to third-party property while undertaking work.
I wouldn't have worked without this cover when I was a freelance photographer. The chance of someone tripping over my camera bag and injuring themselves was too big a risk to take. However, it isn't applicable to all freelancers.
Some freelancers work remotely, handling all client communication via Skype, Google Hangouts etc. If that sounds like you, public liability may be overkill.
But if you have clients visit your office or you work on-site at client premises, you may want to consider this cover. If you work from a co-working space you may also find there's a clause in your contract to have public liability insurance.
A lot of freelancers opt to add public liability to their policy because it's low cost and offers extra peace of mind.
Cost: Expect to pay around £35 annually for public liability.
What about Employers' Liability insurance?
This is a legal requirement if you have employees. Failing to buy employers' liability insurance when you have 1 or more employees can result in a costly fine.
Employers' liability is similar to public liability, but applies to employees instead of members of the public. For example, a member of staff sustaining an injury or illness as a result of working for you.
Freelancers who work solo are exempt from this, but we've had several customers add this to their existing policy as they begin to grow and hire staff.
It's also a legal requirement for limited companies with 2 directors, each with a 50% share.
Cost: Expect to pay around £60 annually for employers' liability.
What other kind of insurance should I consider as a freelancer?
Contents insurance is another popular type of cover for freelancers and is where most of our claims stem from. Your tools are your business, whether you're designing on a 4K Retina iMac or sending emails from your phone.
If your contents were to be damaged or stolen, do you have the capital to replace them? Contents insurance is designed to solve that problem.
Legal expenses can be added to your policy to provide assistance prior to making a claim such as use of a legal advice helpline and legal templates. It also provides a debt recovery service where overdue invoices are chased on your behalf.
What now? Get a quote. Our quote system is free, fast and fun (try it to see).