Buying the right insurance as a sole trader

Are you a sole trader?  Many sole traders don’t even realise that term or classification when asked.  If you’re a self-employed ‘one man band’ then the likelihood is that you’re a sole trader.  

Protecting your livelihood is important when you’re a sole trader but many of those who are self-employed and are sole traders are not aware what insurance products are available to them – or why they should buy them.

Public Liability Insurance – this will protect you in the event of injury to a member of the public or even damage to their property.  You may need this if your work involves contact with members of the public.  This could include builders or tradesmen but equally any sole trader whose general work brings them into contact with members of the general public.

Professional Indemnity Insurance – if you’re a self-employed professional and your work involves giving advice or providing a professional service to your customers, then you might need professional indemnity insurance.  Professional indemnity insurance protects you against your legal liability for negligence or mistakes in your day-to-day work.  Claims can arise from any customer who is unhappy with the professional service or advice you have provided and who feels they have suffered a financial loss as a result.  Professionals who may need Professional indemnity insurance include IT consultants, architects, business management consultants, engineers, project managers and financial advisors.

Employers’ Liability Insurance – this isn’t normally required by sole traders but you should be aware that if you occasionally employ other workers such as during seasonal activity then you must have Employers’ Liability insurance.  You will even need Employers’ Liability insurance as a sole trader if you employ a cleaner, a gardener or a security guard – even if it’s on a part-time basis.  Employers’ Liability insurance protects your legal liability as a sole trader should someone you employ get injured or become ill as a result of work they’ve done for you and seeks compensation from you.  It’s also an offence not to have Employers’ Liability insurance if you are required to do so and carries a fine of up to £2,500 per day.

Products Liability Insurance – this will protect your legal liabilities in the event of a member of the public sustaining injury or damage to their property caused by your products. You will need this cover if your business involves the sale of products to members of the public.

Your Cherrypicked insurance broker will be able to advise you on the right sole trader insurance package.

Last reviewed 8/11/2011

To talk to an expert in your area and get a quote, contact your local insurance broker.