When you’re self-employed you don’t have employer benefits to fall back on. In fact, you might even be the employer needing to organise (and pay for) employee benefits. You’ll definitely be responsible for protecting any assets related to your business. With that in mind, here is a quick guide to insurance for the self-employed.
Start with yourself
Your first priority should be to ensure that you have adequate personal insurance. In particular, you might want to look at critical illness cover and income protection cover.
Both of these could help to minimise the time you need to take off work (by allowing you to access private care. They could also provide you with money to pay not just for personal assistance but with assistance for your business.
If you are running a limited company, then you might want to consider taking out key person insurance for yourself. Key person cover pays the business if a key individual becomes unable to work for example through death or illness. This could give your next-of-kin space to deal with the situation and keep the business going.
Protect the people who matter
If you have any direct employees or workers, then you need employer liability insurance. You might also want to offer relevant life insurance as this is a fairly standard employee benefit most people expect. Similarly, if you have particularly important employees (or company directors or partners), then you might want to think about covering them with key person insurance.
You might also want to look at taking out shareholder protection insurance for the company owners. Shareholder protection insurance is similar to life insurance but it’s used to allow a business to buy the shares of a deceased owner from their estate. This keeps the business running smoothly while supporting any next of kin.
Depending on the nature of your business you might want some form of professional indemnity insurance. As a side note, you might want to put a process in place to make sure that any freelancer/vendor you hire also has appropriate insurance.
If you’re working with the public it’s highly advisable (and sometimes mandatory) to have public liability insurance. Remember that the legal definition of “the public” is far wider than just “customers”. It basically includes anyone who legitimately visits your business premises. This means that it covers people such as delivery staff, tradespeople and other suppliers.
Protect your location and assets
If you’re working from home, then you’ll need to make sure that your home insurance covers your business activities. If you’re working outside the home, then you’ll need to check what insurance you need to protect your business premises and any assets you store there. In addition to regular insurance, you might want to look at business continuity insurance.
If you have digital assets, then cybersecurity insurance could be a very advisable precaution. You would, however, need to make sure that you had the right policy for your needs.
Basically, if you’re running your own infrastructure, then you are responsible for all aspects of security. If, however, you are using the cloud, then, generally, the vendor is responsible for securing the platform against external threats. The client (or tenant) is responsible for securing their use of the platform.
In short, therefore, the exact nature of your IT set-up may strongly influence your digital insurance needs. As previously mentioned, you might also want to ensure that any freelancers/managed IT services companies/vendors and other third parties you use all have their own insurance too.
Secure your business income
If you take payment in arrears then you might want to look at credit insurance. This protects your business against payments not being made in full and on time. On a separate note, you should also familiarise yourself with the rules surrounding any digital payment methods you use. If you still take cash you need to store and insure it appropriately.