What is public liability insurance?

What is professional indemnity insurance?

What is occupational personal accident cover?

What is legal expenses insurance?

What is employers’ liability insurance?

What is directors’ and officers’ liability insurance?

Why might freelancers need business insurance?

Recommendations and requirements

As a freelancer, you have a duty to protect anyone who might be affected by your professional activities, whether you are on your own premises or at a client’s site.

Public liability insurance provides cover if someone is injured or third party property is damaged as a result of your actions whilst supplying services. It also covers legal fees that may arise as a consequence of any claims you have to defend.

Having public liability insurance allows you to go about your work safe in the knowledge that you are covered should you cause any accidental damage or injury.

Even if your contract doesn’t stipulate that having public liability is a requirement, it’s still a very good idea to make sure you hold insurance as you could still be sued.

Example Claim

You leave a bag in a hallway which causes someone to trip and hurt their arm. Your policy covers legal defense costs and compensation paid to the injured party.

Professional indemnity insurance is designed to protect you against claims for negligence (such as making a mistake, or giving bad advice). It also provides cover for loss of documents, loss of data, breaches of intellectual property, defamation and libel.

If you do make a mistake for which you are responsible or are deemed to have been negligent, then professional indemnity insurance will cover compensation that you have to pay as a result, as well as the legal fees you have incurred in the process. It will also cover the cost of fixing a mistake you may have made, which could help you to avoid having a larger claim made against you.

A mistake could end up costing you tens or hundreds of thousands of pounds. A minimum of £1,000,000 in professional indemnity cover is seen as standard for most clients and agencies.

It’s worth checking that your professional indemnity policy also includes retroactive cover, which will protect you against any work you did in previous years. Even if you’re accused of a mistake and you don’t think you were negligent, it’s still costly to defend yourself. Professional indemnity insurance provides you with the protection to be able to defend the claim.

Example Claim

A laptop that contains key work for a client is stolen from your car. The loss of data causes costly delays to your client’s project. Your policy will cover legal defence costs and damages awarded against you.

If you’re injured as a result of an occupational accident and are unable to work, then there’s a good chance you’ll be looking at a significant financial loss.

With personal accident cover, you will be paid a benefit whilst you recuperate, meaning you won’t have to worry about those food bills, the mortgage, or any of the other things you might take for granted when you’re working and earning money.

Should your accident leave you with a permanent disability, or cause your death, then a lump sum is usually paid out. An occupational accident may include the following: injury while working from your home office, injury on site or at a client’s office, or injury while travelling to or from a client’s site or your own home office.

As an employee you would be looked after by the company you work for should you have an accident, but it’s important to remember that as a freelancer you may lose your contract if you cannot work and subsequently, your income.

Example Claim

You have a car accident while driving to your client’s office. Your injury means you cannot work for a prolonged period. You can claim a weekly benefit to help cover your costs whilst recovering.

Legal expenses insurance helps cover costs when your limited company is involved in defending a commercial dispute such as a tax investigation, or when facing issues around employment.

This policy will also pay the costs of pursuing a dispute against a third party.

Cover may include:

Example Claim

You are called up for jury service and are able to claim compensation for loss of earnings.

If you are the sole employee of your limited company and own more than 50% of the issued share capital, then your company is exempt from holding employers’ liability legally. However, most contracts are standardised and it is still very likely that your client will require your business to hold employers’ liability insurance.

It will also cover you if you have a family member working for your business in a clerical capacity, or if there is a substitution clause in your contract.

What is a Substitution Clause?

If for any reason you are unable to complete a contract, a substitution clause allows the use of a qualified replacement to complete the work.

If your business is accused of financial mismanagement, a legislative breach, a health and safety failure, or of breaching company law, then your policy steps in. As the director of your business you can be held personally liable for many reasons. Action can be taken against you by a number of people – a regulator, your end client, the taxman - if they think you haven’t been sticking to the rules.

Having directors’ and officers’ liability provides you with reassurance and a valuable safety net, covering any legal fees that may arise as a consequence of claims you have to defend.

Directors’ and officers’ liability provides cover for your legal defence costs and will protect your financial assets.

Example Claim

You fail to submit your company’s accounts to Companies House and are prosecuted under the Companies Act. In such a scenario you would be covered under directors’ and officers’ liability insurance.

As a freelancer, you're hired by businesses for your particular set of skills, experience, and professional advice. If you, in the performance of your expertise for a business, make an error or mistake that has a negative effect on that business, a claim could be made against you and you could be held liable. A costly claim can be the difference between you being able to continue freelancing in future or being shut down.

Even if your contract with a business has ended or you have closed your own business, claims for previous work you've done can still be made against you and you can still be held liable for them. That's why it can be important to have the relevant insurances in place at all times.

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Some clients may have specific insurance requirements that will be communicated when you engage with them.

We recommend freelancers based in the UK have professional and indemnity insurance. The minimum cover for each should be £1,000,000.

If you receive an Independent Contractor classification Commercial Insurance is required. Find below the minimum insurance that will be required:

- General liability insurance of $2,000,000

- Errors & Omissions insurance (including data protection/cyber) of $1,000,000

- Auto liability coverage of $1,000,000

- Workers compensation insurance of $1,000,000

You can substitute proof of health insurance coverage for worker's compensation coverage unless you have additional employees at your company who will be working on this project.

You can purchase insurance from any source as long as it meets the insurance requirements. Our staffing partner has partnered with two insurance suppliers - Berxi and Bunker - to make it easy for you to purchase insurance. Note, they have no affiliation with any insurance company.

You will need to upload your insurance documents as part of the classification process.

If you receive a W-2 Employee you will be covered by our staffing partner insurance.

We require freelancers to have professional indemnity insurance and public liability insurance. The minimum cover for each is £1,000,000.
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