Insurance for the Self-Employed UK — What You Actually Need

Self-employed? Here’s what insurance you need, what’s optional, and what to skip.

Insurance Requirements Summary

By Legal Requirement

Insurance	Legally Required?	When Needed
Employer’s liability	Yes — if you have employees	Any employees, including casual
Business motor insurance	Yes — if driving for work	Deliveries, client visits, etc.
Public liability	No — but often contractually required	Client premises, public interaction
Professional indemnity	No — but often contractually required	Advice, services, designs
Income protection	No	Protects your income if ill

What Most Self-Employed People Get

Profession Type	Typical Insurance
Tradespeople	Public liability + tools
Consultants	Professional indemnity
Tech/IT	Professional indemnity + cyber
Freelancers with staff	Employer’s liability + above
Product sellers	Product liability

Types of Business Insurance

1. Public Liability Insurance

Feature	Details
Covers	Injury to public, damage to property
Example	Client trips over your equipment
Typical cover	£1m-10m
Cost	£50-200/year (low risk)

Who needs it:

• Tradespeople
• Anyone visiting client premises
• Event workers
• Fitness instructors
• Cleaning businesses

2. Professional Indemnity Insurance

Feature	Details
Covers	Claims from professional mistakes
Example	Advice costs client money
Typical cover	£100k-1m+
Cost	£100-500/year

Who needs it:

• Consultants
• IT/tech freelancers
• Accountants
• Designers
• Marketing professionals
• Anyone giving advice or creating work

3. Employer’s Liability Insurance

Feature	Details
Covers	Employee injury/illness claims
Legal minimum	£5 million
Required if	You have any employees
Penalty without	Fine up to £2,500 per day
Cost	£70-150/year (small business)

You need it if you have:

• Full-time employees
• Part-time employees
• Temporary workers
• Apprentices

4. Business Motor Insurance

Feature	Details
Covers	Vehicle use for work
Standard personal policy	Doesn’t cover business use
Social, domestic & pleasure	Not enough for work
Business use needed	Visiting clients, carrying goods

Options:

Type	Covers
Class 1	Commuting + business meetings
Commercial	Tools, goods, deliveries
Goods in transit	Items you’re transporting

5. Income Protection Insurance

Feature	Details
Covers	Your income if you can’t work
Pays	Monthly income replacement
Typically	50-70% of income
Until	You recover or reach state pension age
Cost	£30-100+/month

Why it matters for self-employed:

• No employer sick pay
• SSP doesn’t apply to you
• EMployment and Support Allowance is limited

6. Tools and Equipment Insurance

Feature	Details
Covers	Tools, equipment, stock
Typical events	Theft, damage, loss
Where	Van, site, home, storage
Cost	£100-300/year

7. Cyber Insurance

Feature	Details
Covers	Data breaches, hacking, cyber crime
For	Freelancers handling client data
Cost	£100-500/year

8. Product Liability Insurance

Feature	Details
Covers	Claims from products you sell/make
Example	Product causes injury
Who needs it	Anyone selling physical products

Costs by Profession

Typical Annual Costs

Profession	Key Insurance	Typical Cost
Electrician	Public liability + tools	£200-400
Plumber	Public liability + tools	£200-400
Consultant	Professional indemnity	£100-300
IT contractor	Professional indemnity + cyber	£200-500
Graphic designer	Professional indemnity	£100-250
Cleaner	Public liability	£80-150
Personal trainer	Public liability	£100-200
Photographer	Public liability + equipment	£200-400
Builder	Public liability + employer’s	£300-800

What Affects Price

Factor	Higher Cost If
Profession	Higher risk work
Turnover	Larger business
Cover level	Higher limits
Claims history	Previous claims
Number of employees	More staff
Location	London higher

Income Protection for Self-Employed

Why It’s Important

Situation	Employee	Self-Employed
Short-term illness	Statutory Sick Pay	Nothing
Long-term illness	Often employer scheme	Nothing
Your only protection	Company benefits	What you arrange

Income Protection Options

Type	Details
Short-term	Covers 1-2 years
Long-term	Covers until recovery/retirement
Accident only	Cheaper, limited
Full cover	Illness + accidents

Typical Costs

Age	Monthly Cost (£30k cover)
30	£30-50
40	£50-80
50	£80-150

Depends heavily on job, health, deferred period.

Deferred Period

Period	What It Means	Cost
1 week	Pays after 1 week off	Most expensive
4 weeks	Pays after 4 weeks	Mid-range
13 weeks	Pays after 13 weeks	Cheaper
26 weeks	Pays after 26 weeks	Cheapest

Tip: Have emergency fund to cover deferred period, choose longer deferral for lower premiums.

Do You Really Need It?

Public Liability

Situation	Recommendation
Never visit client premises	Lower priority
Work from home only (no visitors)	Lower priority
Client requires it	Yes — get it
Work at client locations	Yes
Interact with public	Yes
Handle client property	Yes

Professional Indemnity

Situation	Recommendation
Give advice	Yes
Create designs/content	Yes
Write code/software	Yes
Handle client data	Yes
Purely manual work	Usually not needed
Client requires it	Yes — get it

Income Protection

Situation	Priority
No savings buffer	High priority
Family depends on income	High priority
Large mortgage/rent	High priority
Good savings (6+ months)	Lower priority
Partner earns well	Lower priority
Close to retirement	Lower priority

Where to Buy

Sources of Business Insurance

Source	Pros	Cons
Specialist brokers	Expert advice, tailored	May cost more
Comparison sites	Quick, competitive	Generic
Trade associations	Member discounts	Limited to your trade
Direct insurers	No middleman	Less advice

Comparison Sites

Site	Coverage
Simply Business	Wide range
Hiscox Direct	Online business focus
Superscript	Tech/freelancer focus
PolicyBee	Freelancers/SMEs

Trade Associations

Benefit	Details
Group deals	Discounted rates
Specialist cover	Designed for your trade
Membership included	Sometimes bundled

Example: Federation of Master Builders, ACE (Association of Consultancy and Engineering)

Common Mistakes

What to Avoid

Mistake	Why It’s a Problem
No business car insurance	Personal policy won’t pay out
Cover too low	Large claim exceeds limit
Wrong profession stated	Claim rejected
Assuming covered by client	You’re usually expected to have your own
Not reading exclusions	Surprises at claim time

Check Your Policy Covers

Check	Details
Actual work you do	Job description accurate
All locations you work	Home, sites, etc.
Subcontractors	If you use them
Correct turnover	Don’t understate
Cover limits adequate	£1m minimum for most

Summary: Self-Employed Insurance Checklist

Type	Legal?	Get If
Employer’s liability	Yes (with staff)	Any employees
Business motor	Yes (using vehicle)	Any work driving
Public liability	No	Client contact, premises
Professional indemnity	No	Give advice, create work
Income protection	No	Protect your income
Tools/equipment	No	Valuable kit
Cyber	No	Handle data

Priority Order (Most Self-Employed)

1. Required by law — Employer’s liability (if staff), business motor (if driving)
2. Required by clients — Whatever contracts demand
3. Income protection — Your income is your biggest asset
4. Public liability — If any public/client interaction
5. Professional indemnity — If any advice/professional services
6. Everything else — Based on your specific risks

Don’t over-insure, but don’t under-insure either. One uninsured claim could wipe out your business.