What freelance insurance do I need?
As a freelancer you work for yourself, so you need to make sure to have insurance in place as a protection; something you wouldn’t have to think about if you were an employee.
There are multiple different types of insurance that freelancers can take out. Some might be happier having the maximum amount of cover for peace of mind, others might want just basics. Whatever type of freelancer you are, there are a number of freelancer insurance policies highly recommended to all.
Insurance is a cover, it’s a form of protection that allows you and your business to be able to operate. In this freelancer insurance guide you will find all the types of insurance that are relevant for freelancers.
Professional Indemnity insurance
One of the most important types of insurance that freelancers and the self-employed will need is professional indemnity insurance. This insurance will protect you, should any previous clients sue you because they had to face a financial loss due to your service/advice. The costs of this can be huge, you could be sued for hundreds of thousands, therefore it’s highly recommended that you seek cover. Also keep in mind that you will lose money from not doing your actual work, while you are defending yourself against any allegations. Some professional bodies may require anyone working in that profession to have a professional indemnity insurance policy, and some clients also stipulate that a policy must be in place for them to work with you.
Income protection insurance
Income protection insurance provides you with an income if you become seriously ill and are unable to work. This is essential for the self-employed and freelancers as they don’t have the benefit of sick pay from their employer. If you are injured or seriously ill for a prolonged period of time then you will need some kind of income to support yourself and anyone who is dependent on you.
When it comes to getting paid if you have fallen severely ill or are injured, there is a waiting period. The length of your waiting period will depend on your policy, and once your waiting time is over you will start getting paid. When taking out a policy make sure that you are clear on all the details of the policy. You will need to know how much you will be paid and how long your waiting period will be.
Therefore income protection insurance is again something that freelancers are strongly advised to get, as the risks of not having it can be huge. You have to plan for emergencies and have a contingency plan in place, should things go wrong.
Public liability insurance
If you are a freelancer working from home and you have minimal face-to-face interaction with your clients this may have little relevance to you. However, if you have an office where you meet clients or visit clients frequently then getting public liability insurance is something you should consider. Public liability insurance is a type of business insurance that protects you if you are being sued by a customer or client who is hurt or has an accident on your premises. For example, if a client sustained an injury because the floor at your premises was slippery or there were not proper safety measures put in place, public liability insurance will cover you for that.
Public liability insurance can cover the legal costs as well as the compensation you will have to pay out to your client. You will need to consider whether this insurance is relevant to you, but also make sure you understand the consequences if you decide not to go for this insurance.
Tax investigation and IR35 insurance
Tax investigation and IR35 insurance have become popular since the rise of IR35. IR35 affects all freelancers who do not meet HMRC's definition of self-employed and was designed to stop freelancers working as 'disguised employees' by taxing them at a rate similar to employment. Despite your best efforts to ensure you are operating compliantly with IR35 legislation, which for most means operating 'outside IR35', you will still always be at risk of an IR35 investigation by HMRC. The great benefit of tax investigation and IR35 insurance is that the insurer will deal with HMRC in these instances, allowing you to continue working and doing what you do best. Dealing with HMRC yourself - particularly in an IR35 enquiry - is difficult, and it’s far better to have someone with experience of handling investigations to fight your corner. Since IR35 came into place, many freelancers have been almost frightened of the term, however having a tax investigation or IR35 insurance policy in place can provide peace of mind and reassurance that even if the worst was to happen you wouldn't be facing a potentially crippling sum.
Private healthcare insurance
A private healthcare insurance policy can be a great way of protecting yourself and looking after your health. Private healthcare insurance is completely optional and having one will depend on each individual’s needs. If you are able to cover the funds required for a private healthcare insurance then there are some great benefits you can take advantage of. Some of the benefits include; avoiding the lengthy NHS waiting list, reducing your time away from work and getting the best treatment when you need it.
If you are the sole earner of the family and you have loved ones dependent on you financially, then you should look at life insurance. A life insurance policy can support your family/loved ones if you were to pass away. This can be a huge relief for the family as they will have finances to support them after you have gone. A life insurance policy is not a legal requirement, but you may choose to get protected in case something happens to you. The funds from your life insurance can cover debts, mortgages, funeral costs, bills etc., therefore they can lift a huge weight off people you are leaving behind. Life insurance may not be for everyone but it’s certainly worth considering.
Office insurance can be a great way to protect your working environment. If you don’t have an access to your working equipment or office, you could face a financial loss due to not being able to work. An office insurance, depending on your insurance provider will usually cover theft or damage to your equipment. This means that you won’t have to worry about replacing expensive equipment, from your personal finances, should it be damaged or if it gets stolen. For example, if you are a freelance photographer, photography equipment such as lenses and camera bodies are very expensive. This could be a detrimental financial loss to your business if they weren’t protected. It's worth noting that there are multiple different types of office insurances available, for example, you might only want the office building insurance or just the contents insurance.
Cyber and data risk insurance
In the age of GDPR protecting yourself and your client data is absolutely essential. As a freelancer, you will be a business owner, whether you have a limited company or run your business as a sole trader. Therefore, it's your duty to protect the data of your clients. Data breach and theft can be damaging to businesses, therefore its worth considering getting cyber insurance. If you opt for this insurance then make sure that you know everything that will be covered in the insurance.