As a self-employed trader, it can be confusing to choose the right insurance when you are starting out. There are three main types of insurance that can protect your business. These include public liability, employer’s liability and professional indemnity insurance. To figure out which insurance is right for your business, ask yourself the following questions:

Do I employ people?

If you employ staff, you need employer’s liability insurance. In fact, this is a legal requirement if you have part-time, voluntary, contract, temporary or casual staff. If a staff member gets injured or falls ill while working for you, you could end up with a huge claim for compensation. Furthermore, if you don’t have insurance cover of at least £5 million, you risk being fined and prosecuted.

Is there a risk of injury, loss or damage at your workplace?

If you get visitors to your place of work, there is always a risk of them falling or tripping, leading to injuries. This is true even if you work from home. The other scenario is accidentally damaging something on your customer’s property. If this happens, your customer may hold you responsible, leading to an expensive claim. Sometimes, clients insist self-employed traders have public liability insurance before he carries out the work. Under such circumstances, it is important to have public liability insurance.

Do I provide a service or offer professional advice?

If you offer professional advice or provide a service, you will need professional indemnity insurance. This insurance protects you if your standard of work is in doubt or you end up offering bad advice to a client.

There are some professional bodies, like RIBA, ICA and RICS, that require their members to have professional indemnity insurance.

Just because you don’t have a full-fledged office and work from home, do not assume your home insurance policy will offer coverage. On the contrary, the policy will not cover anything related to your business. Make sure you get the right insurance policy to cover your business equipment, documents and customer information. In addition, check your car insurance policy to see whether it offers coverage if you use the vehicle for business purposes. If not, you may need a new policy that does.

As a self-employed professional it is your responsibility to protect your business and getting the right insurance policies is a step in the right direction.