What insurance do you need as a freelancer or contractor?

Being a freelancer or contractor gives you the freedom to choose who you work for, what hours and where. So its not surprising that there are over five million freelancers in the UK living the dream.

But despite this independence, you actually have a lot of responsibility on your shoulders. You don’t have the security of a full-time job, the regular salary and insurance that comes with being employed. So if a disaster strikes, whether it’s flooding to your home office or your specialist equipment is stolen, you could pay thousands of pounds in repairs and also lose regular income.

Not to mention the consequences if you are involved in a legal battle with one of your clients. Without any insurance in place, you could find yourself paying huge legal fees and compensation.

Following up on our article about the insurance you need to run a business from home, we give you the ideal insurance for freelancers and contractors.

Public liability

This protects you as a freelancer for any mishap involved with a member of the public or property. So, if you are contracted to work in someone else’s offices or out in the field and get involved in an accident, your insurance can pay for any potential lawsuits, replacements, legal fees, medical bills and compensation.

The type of accidents to occur include:

• Injuring a colleague or passerby
• Breaking a piece of valuable equipment
• Flooding or setting fire to the building

Professional indemnity

This level of cover is designed to insure freelancers and contractors that give their expert advice for a living. Despite your best intentions, it is possible that your guidance could have negative repercussions to the individual or company’s bottom line.

For lawyers, accountants and financial advisors, a company may be relying on your advice but if they suffer terrible losses as a result, they may wish to take legal action against you and demand compensation. Similarly, for dentists and doctors, if you misdiagnosed a patient and they suffered as a result, they may wish to pursue legal action to receive a settlement.

By having professional indemnity insurance, your policy can pay towards any legal fees or compensation you may have to pay towards the client.

Contents insurance

Contents insurance is ideal for freelancers and contractors that use specialist machinery or equipment to carry out their work such as video, photography, retail and basic laptops and computers.

If these key items are stolen, broken or vandalised, you may not be able to carry out your work as per usual. Your contents cover will reimburse you or give you the money upfront so you can get a speedy repair or replacement and be back at work in no time.

Business interruption

Freelancers and contractors sacrifice their independence for a regular salary and job security. But in the event you are involved in a lawsuit, have broken equipment or are not in a physical state to work, you can potentially go weeks or months without working and earning a living.

Business interruption insurance allows you to claim money for the time you are unable to work, so there is no loss of income at any point.

How much cover do you need?

The amount of cover required naturally depends on the individual – what risk they come into contact with and what industry they work in. So, a photographer with a lot of expensive equipment travelling all over the world will probably need more public liability cover and contents insurance than someone who works from a laptop at home all day.

The most basic freelancer insurance starts at £25 per month and you need to speak to a business insurance company so that you can find just the right level of cover for you. For instance, if you over-insure your items, you will be paying too much but under-insure your contents and you may not have enough to replace them. So it is important that you find the right balance and make sure that you are fully prepared if disaster strikes.

Freelancer insurance is also not just something that individuals should be looking at but it should also be addressed on a company level. If your organisation hires freelancers, they won’t have the same level of cover as a regular employee, so it is important that you are insured in case they cause an accident or get swept up in a legal battle.