As a sole trader, it makes good sense to protect yourself against the unexpected.
There are different levels of cover for all types of small businesses, be it a sole trader or a limited company. You can decide on cover specific to dealing with members of the public or product liability, or perhaps you just want contents insurance or personal accident insurance. It should be as unique as your company needs it to be.
It is important to understand and accept the financial risk you may incur through your work. You should consider the following questions carefully:
If your answer is yes to any of these you are potentially exposed to risk and should consider sole trader insurance.
If you fail to put effective insurance in place, you could face potential liabilities for all the costs. This can include legal fees, compensation claims as well as the defence of any claims made against you.
You may suffer a loss of income if you have an accident at work or important equipment is damaged or stolen. The real value is the reassurance that unexpected surprises can be dealt with by your insurance company. It is also recommended that you deal with an insurance company that is regulated by the financial conduct authority.
This provides protection in the event of claims made against you as a result of allegations of professional negligence. Cover includes legal defence costs and any damages awarded. Claims for negligence can be made against any business providing professional services.
Claims can be made up to 6 years from the date that the services were provided. Because of this, many clients will want you to have appropriate insurance in place and may make it a contractual requirement.
A standard figure for cover is usually £1 million. Certain clients may request different levels dependent on the services being provided and/or the size of the client.
Once the services are complete, most insurance policies will stop covering for any potential claims arising as a result of those services (including defective work). It is therefore advisable that you speak to your insurance broker about arranging any relevant run-off cover.
Run-off cover is insurance that remains in place even where the services are no longer being provided. As claims can be made after the services have been provided, run-off cover is necessary in this case to protect your business.
Public Liability Insurance provides protection against claims of accidental bodily injury to third parties, or damage to third party property arising in the course of your business activities.
Although Public Liability Insurance is discretionary, it's worth considering that you have a duty to protect anyone who might be affected by the provision of your services. If someone makes a claim against you and you are found liable, your insurers will be able to cover the majority of the claim. This saves your business having to find funds to cover the entire liability.
A standard figure for cover is usually £5 million. Certain clients may request different levels dependent on the services being provided and/or the size of the project.
Employers’ Liability Insurance covers claims by employees in respect of injury or disease arising in the course of their work and for which you are responsible. It's a compulsory policy that you must have if you employ people, but there are a few exemptions as set out in the Employers’ Liability (Compulsory Insurance) Act 1969. It covers claims being made against you and enables you to meet the cost of compensation for any injuries or illness caused.
£5 million is the minimum limit required by law although most policies will give £10 million as standard.
If you are injured in a work-related accident which leaves you unable to work, then you are likely to suffer a financial loss. As a Sole Trader, your livelihood depends on your ability to carry out the work you have been contracted to undertake.
Personal accident cover helps to ease the financial exposure associated with occupational accidents. You generally pay a monthly premium that usually remains the same during the length of the policy. Regardless of blame, personal accident cover will usually pay you a weekly benefit while you recover from your injury. In addition, lump-sum payments may also be available for death or permanent disability resulting from an occupational accident.
Damage or theft of essential equipment can threaten your ability to complete a contract satisfactorily. Taking out insurance to cover your equipment means you’ve got peace of mind if it's damaged or stolen, and you can replace it without it disrupting your business.
Imagine a situation where you lost all or part of your business equipment and ask yourself the following questions:
Do you have sufficient funds to replace the equipment immediately?
How much income will you lose while the business equipment is unusable?
Without business equipment insurance, if you are unfortunate enough to have your equipment stolen or damaged, you have to cover the cost of repairing or replacing it. This could have considerable financial implications for you.
Business equipment insurance will cover the equipment and tools you use for your business against damage, loss, destruction or theft. Sometimes you may have to leave equipment on worksites that are particularly vulnerable to theft and vandalism. It is reassuring to know that equipment under these circumstances could be replaced and paid for by your insurer. Arranging the right business equipment insurance is vital.
Insurance packages differ from business to business, sector to sector, and can be tailored to suit your requirements. If you would like some more detailed personal assistance, Kingsbridge can provide you with advice and information specific to your circumstances. We offer an exceptional insurance package through our insurance partners, Kingsbridge Contractor Insurance, covering all of these key elements.
Full cover with one package
Cover for previous work
Personal Accident included
Instant access to policy documents
Tax-deductible business expense
Insurance that acts as an IR35 indicator
