Insurance - finding cover for freelancing

If you're a freelancer, you're in good company. There are over 2 million people in the UK who enjoy the benefits of freelance working, contributing to an estimated contribution to the economy of over £162bn.

There are many benefits to working as a freelancer, the freedom to choose your clients, your hours and your location to name just a few. However, freelancing also exposes you to certain risks that you wouldn't face as a traditional employee, and as the sole member of your workforce it’s on you to protect against these risks. 

That's why investing in the right insurance is essential, so you won't be saddled with a crippling bill if anything goes wrong. Luckily we have put together a simple guide to getting your cover sorted, so you can tick that off the list.  

Do you need insurance to freelance?

It’s only mandatory to have business insurance in the UK if you have employees, which is unlikely if you’re freelancing. That said, there are two important things to consider when deciding whether to purchase insurance:

• The cost of a claim: whether it’s a claim against you, or one you need to make, the likelihood is any claim will far outweigh the cost of purchasing insurance. Having cover in place could make all the difference in the unfortunate event of a claim.
• Your work opportunities: you may find clients or associations you wish to work with require some level of insurance to work with you, so having cover could open up more freelance opportunities.

What covers should freelancers consider?

Business insurance is made up of any number of covers, the covers that you purchase will depend on the nature and risk of your work. The covers you chose will largely depend on the freelance work you do; however we’ve outlined some common covers most freelancers will consider.

1. Professional Indemnity cover

Most freelancers are in the business of offering consultancy or advice, which means that professional indemnity insurance (PI) is a good place to start. PI will protect you if you make a mistake, or if a client suffers – or claims to suffer – a financial loss as a result of your work. This includes covering legal expenses and compensation you have to pay.

So, if you're a marketing and communications consultant, PR professional, Design consultant – or something similar – this is a must-have. You may also find that clients insist you have PI – so it could even help you win business (or not lose it!).

Watch out for: if you only work for part of the year, you can save money by choosing a subscription-style model that allows you to pay monthly and cancel at any time.

2. Business equipment cover

It’s likely that you’ll rely on some kit when freelancing, whether it's a laptop, filming equipment or some more – so, protecting this with business equipment insurance should be a priority. Business contents covers everything in your primary place of work, including your computers, office furniture and documents. If you work on the go from multiple locations you should also consider portable equipment, such as laptops, mobiles, cameras and tablets.

Watch out for: if you're based in a co-working space, you may find that insurers won't cover you, it’s important to check the terms of your cover when you purchase.

3. Public liability insurance

Public liability insurance protects you if you cause injury or property damage to a third party - basically anyone but yourself. This could occur anywhere, be it at your home office, co-working space, at a client's offices, or when out and about.

Most freelancers will consider this cover, even if you’re mostly home based. Your level of cover will depend on what you do, for example, if you're a freelance film producer, you're likely to require a higher level of cover than say a designer or copywriter working from home. Similarly, if you spend a lot of time going to events and visiting clients, this will increase your risk exposure.

4. Cyber insurance

Cyber-attacks and data breaches are among the biggest risks currently facing small businesses and freelancers, so if you handle any client or customer data, cyber insurance should be considered. Breaches will be handled by a world class team and cyber cover will protect you in the case of a breach of data protection laws (where insurable by law) and your liability for handling data, as well as cover for extortion, system rectification costs, plus PR expenses and financial loss due to system downtime.

Purchasing business insurance

Getting the right insurance gives you peace of mind and head space to focus on what you're really good at – and what you get paid for – knowing that you're protected, whatever happens!

Often traditional business insurance policies aren't designed for freelancers, due to the more flexible nature of what you do. It can be easy to find yourself with insufficient cover, or paying way too much, if you don't shop around carefully.