Business insurance for sole traders
Working for yourself can bring fantastic rewards. But it can also bring risks.
Whichever way you spin it, you're in charge. On top of your day job, you could also be responsible for looking after marketing, accounts, sales, ordering stationery, equipment maintenance, cleaning, insurance…
But it doesn’t matter how organised you are, things can go wrong. Accidents happen, a client complains, or your equipment gets damaged or stolen. And you’ll need time and a large bank balance to sort it.
That’s where sole trader insurance comes in. It gives you a team of experts on hand to help smooth out a crisis and fight your corner.
Sole trader insurance can (among other things) pay legal costs and compensation if a client complains the job isn't A* quality. Or if you break a priceless possession or injure a client. It can also cover your kit for loss, damage, or theft.
It offers the support and security you need when everything’s on you.
Sole trader insurance FAQs
Who needs sole traders’ insurance?
Being a sole trader means you’re running the show on your own. So, having back-up in the form of insurance is a pretty excellent idea!
It doesn’t really matter what you do - from the building trade to hairdressing, and everything in between. All jobs carry risks of some kind.
And if you’re a sole trader, chances are, you don’t have a wealth of legal knowledge or a bottomless gold pot at the end of your business rainbow.
That’s why paying out a little each month for sole trader insurance is a wise move. It gives you the financial protection you need to ward off sleepless nights.
What insurance do I need as a sole trader?
That will all depend on what your business does.
Most sole traders will need professional indemnity insurance to deal with claims you didn’t do your job properly. Or public liability insurance for slips, trips, and other damaging mishaps. Often both.
If you have your own work premises, be it a yard or a salon, some commercial property insurance will be needed, and maybe stock insurance too. If you’re on the move a lot, portable equipment insurance is a good idea.
For anyone working online, in any capacity, cyber insurance is worth considering too.
And don’t forget, even if you’re a sole trader, if you employ anyone it’s the law for you to have employers’ liability insurance in place.
What does sole trader professional indemnity insurance cover?
When you’re the boss, the buck stops with you. And if someone says the work isn’t up to scratch, it can be a problem.
You give someone bad advice, or a job doesn’t go to plan, and you could end up with an unhappy client who says they’re out of pocket.
Sole trader professional indemnity insurance compensates your client and pays for a specialist solicitor if you need one.
What is sole trader public liability insurance and do I need it?
Accidents happen. It doesn’t matter how careful you are.
Spill a coffee over a client’s laptop, wreck their antique furniture or leave your toolbox out and they trip and injure themselves, and it can cost you. If your client says you’re liable, you’ll face a bill.
Legal fees, court costs, and compensation can run into thousands. Sole trader public liability insurance (PL) will cover all the bases. Even if it isn’t your fault, PL will help defend you.
How much does sole traders’ insurance cost?
Because sole traders’ insurance requirements differ so widely, we can’t give you a straightforward answer to that one. But we can help you build a better picture.
It might seem pretty obvious, but we’ll point out anyway, that the more different types of insurance you have, the more you’ll pay. So, think carefully about what you need.
Having said that, it’s always better to be over-insured than under-insured. If your level of cover is below what a claim costs in legal fees and compensation, you could still end up paying plenty from your own pocket.
If you speak to a broker, they can help you decipher exactly what you need. Working to get you a policy that’s both affordable and ticks all the boxes. To get an idea of cost, you can get a quick quote online.
Why choose us for your sole trader insurance?
You have your trade. And we have ours. (It’s business insurance, obviously.)
We don’t just sell you insurance, we’re recognised by the Financial Conduct Authority (FCA) as being qualified to give you advice too. So, you can be sure you’re getting the right policy for your business.
We promise that any advice we do give you will be jargon-free. That’s kind of our thing, making tough insurance talk a thing of the past. So feel free to give our team of expert advisers a call.
Don’t want to take our word for it? Head to our customer feedback page. We’re platinum-rated you know.
FAQs
One important coverage you may want to consider is professional liability insurance for sole proprietorships. Professional liability insurance, or errors and omissions insurance, helps protect your business in case you get sued for mistakes in the professional services you've provided.
Do traders need insurance? ›
For market traders and stallholders, having a good public liability insurance policy is super important. Failing to take one out could be a costly mistake. It could even end up costing you your business.
What is a reasonable level of professional indemnity insurance? ›
Based only on our experience, we recommend the following as a minimum guide: Sole Trader - Insure for at least four times fee income (£ 250,000 minimum) Limited Company - Insure for at least three times fee income (£ 500,000 minimum) Partnership - Insure for at least four times fee income (£ 1 million minimum)
How much does business insurance cost in Australia? ›
Average Cost per Business Insurance Policy
| Type of policy | Average monthly cost | Average annual cost |
|---|
| Cyber liability insurance | $123.75 | $1,485 |
| Business interruption insurance | $40 | $480 |
| Workers compensation | $70 | $840 |
| Total average cost: | $340.75 | $4,090 |
3 more rowsThere are important differences between LLCs and sole proprietorships. The most significant difference is whether you have limited liability for the business' debts and obligations, as with an LLC, or whether the business' liabilities and obligations fall to you personally in the event of a lawsuit or debt collection.
What insurance do I need to run my own business? ›
When you're starting your own business, some types of coverage you should make sure to have are: General liability insurance. Professional liability insurance. Workers' compensation insurance.
What are the liabilities of a sole trader? ›
As a sole trader, you are personally liable for your business debts. This means that you have to pay these debts out of your own income.
What qualifies you as a trader? ›
You must trade frequently and regularly.
This is, by far, the most challenging criterion to hit. But what does “frequently” mean, exactly? The stock market is open 252 days per year. The IRS states that you must actively trade in at least 189 days of the 252 days.
What insurance do I need as a self-employed consultant? ›
General Liability Insurance
General liability insurance is often necessary for independents. This insurance covers a wide range of incidents, including accidental damage to a client's property, claims of libel or slander, and the cost of defending lawsuits.
How much pi should I have? ›
Typically we see most clients are requested to hold minimum limit of indemnity of £1,000,000. If they've specified that you need to have professional indemnity insurance but don't state a limit, it may be worth checking with them how much they would consider acceptable before you buy.
Your sales level and risk of injury will both impact how much professional indemnity coverage you need. The larger the business, the higher coverage that you will need. Smaller businesses might settle on around $1,000,000 of coverage while large enterprises may choose to insure up to $20,000,000 or more.
What is professional indemnity cost? ›
Like any other insurance type, covering for risks comes at a cost. In the article below we shall look at the factors that affect professional indemnity insurance costs. Read more. Get ₹10 Lac Cover starting at ₹873*
How much is a $2 million dollar insurance policy for a business? ›
On average, an insurance policy that offers coverage for up to $2 million can cost about $30 a month in premiums.
How much does 1 million dollars of business insurance cost? ›
On average, a $1 million liability insurance policy costs $69 a month, or $824 a year, for our small business owners. Keep in mind that every business is different, so the $1 million liability insurance cost will vary.
How much does insurance cost for a startup company? ›
Getting a general liability insurance policy for your startup or small business will cost between $400 and $750 every year or between $42 and $92 per month.
Which insurance is best for self-employed? ›
Blue Cross Blue Shield (BCBS) is the best overall health insurance company for self-employed people for several reasons. It features the best overall cost scores of all providers we reviewed.
What is the best type of insurance for a small business? ›
If your small business provides a professional service or offers advice to clients, it's a good candidate for errors and omissions insurance. Errors and omissions (E&O) insurance pays for costs resulting from mistakes that you make in your work. This insurance is also known as professional liability insurance.
Can a sole proprietor deduct self-employed health insurance? ›
Key Takeaways
If you're self-employed, you may be eligible to deduct premiums that you pay for medical, dental, and qualifying long-term care insurance coverage for yourself, your spouse, and your dependents.
Does umbrella insurance cover sole proprietorship? ›
Answer and Explanation: Yes, the umbrella insurance policy can step out to help a sole proprietor in protecting his or her assets. Through taking an umbrella insurance policy, a sole proprietor is guaranteed that his future profits are safeguarded.
