Business insurance when you’re self employed

There are lots of different kinds of business insurance on offer.

The best type of insurance for you will vary based on various factors, including:

• how many people you employ
• the assets you need to protect
• the type of business you’re running.

Scroll down to take a look at what’s available and what you might need

• If you’re setting up your business from home, the best thing to do is talk to your current insurer and explain your plans. They might ask for an additional premium on your current insurance. If you don’t tell your insurers and you need to make a claim, you might find that your insurance is invalid and that the claim won’t be paid.
• Don’t assume that your personal household insurance will cover you. Even though nine out of ten home insurance policies will cover business equipment in your home – it’s best to be sure.

Typically, cover will depend on the use of the home being for clerical purposes only – for example, office work.

But you won’t be covered if you have any visitors to do with your business – for example, client visits.

Are you a professional who gives certain types of advice or services to your clients? Then you should have professional indemnity insurance.

It can offer protection for your small business if a client claims you've been negligent, given poor advice or made a mistake.

The types of business that use this kind of insurance include:

• doctors
• solicitors
• engineers
• architects
• journalists
• accountants
• business consultants
• financial advisers.

If you employ people, you must have insurance cover to pay compensation to employees injured while doing their jobs. This is a legal requirement.

This will protect you from loss if your premises and its contents are affected by fire, flood, theft and other damage.

The right level of cover will depend on whether you own or lease your premises, as well as the value of your buildings and their contents.

The kit and machinery you use for your business can be insured for the cost of replacing them or their current value, taking wear and tear into account.

You can also get policies to protect machinery and IT equipment against breakdown.

This could be worth thinking about for all your equipment, or even just the essential equipment you wouldn’t be able to work without.

Tradesmen’s tools can also sometimes be added to another liability insurance product. So it’s worth asking if this is possible if you have public liability insurance.

This pays out in the event of a mistake by any of your business activities that causes injury or damage to a customer or member of the public.

For example, you should be covered if a member of the public trips and gets injured because of a spill on a shop floor that isn’t marked with a warning sign.

You’re more likely to need this if people visit your premises, for example if you run a shop.

For a few businesses, including horse riding stables, it’s a legal requirement.

Customers might want to see proof of adequate insurance before they’ll do business with you.

If goods you’ve made, sold or repaired either hurt or kill someone, or damage someone’s property, you might have to pay compensation.

You could be held liable for the damage or injury caused by defects in your product design or manufacture even if you haven’t been negligent.

If your business is in a particularly high-risk sector, such as food and drink, the toy or electrical industry, you really need to consider this.

Product liability cover is often included with public liability insurance.

Do you have goods or stock you send around the country? Then you might want to think about protecting them in case they’re lost or damaged while being transported.

It usually covers road or rail and can often extend to inland or coastal waters. International transit by sea or air needs to be insured separately.

This covers you against the risk of your customers not paying you because they go bust or don’t pay in time.

You can tailor the cover to suit your needs – to cover the whole of your turnover or just that of key customers.

You can also protect yourself against the risk of not being paid by overseas customers.

However, you’ll still have to carry some of the risk yourself – so the insurance might cover you for 80% and you’ll have to bear the remaining 20%.

This covers the business up to an agreed limit for any financial losses that would result from the sudden death or illness of a crucial member of the company. This includes the owner or manager.

People who could be covered include:

• the director
• a main sales person
• a vital project manager
• someone with specific skills or knowledge that’s valuable to the company.

This covers the costs of defending a legal action, such as solicitors’ fees and court costs.

Typically, this cover includes employment disputes, property protection and contract disputes.

This will cover you for the costs incurred and loss of profits if you are hit by a disaster like a flood or fire.

If you or your employees need to travel abroad for work, you might want to consider business travel insurance.

If it will just be you travelling for business, you might want to check with your personal travel insurance policy to see if it covers business trips.