Where To Get Freelance Insurance [+ Is It Worth It?]
Many Millennials opt to work freelance, as it offers a high degree of flexibility and the ability to choose work that they really enjoy.
But while freelancers benefit from certain freedoms, they must be on top of admin tasks that an employer would usually take care of, such as tracking finances and buying business insurance.
Is freelance insurance a way to go?
Freelance insurance may seem like a splurge or a nuisance for someone working casually and on their own terms, but it can be an essential safety net if something goes wrong.
Self-employed people and sole traders are not protected by the same legal defenses as a limited company when it comes to money – while they keep all profits after tax, they also take sole responsibility for any losses.
Several nightmare scenarios can occur when running any business, and situations involving liability can end up requiring costly legal assistance and hold the threat of compensation being paid to claimants.
There is not one single ‘freelance insurance package’ because every business is different. Instead, there are several products that a freelancer should consider based on the industry in which they operate.
Here are some common types of business-related insurance that a freelancer might need:
• Public liability insurance: Covering injury to or damage to property of third parties such as customers. This is useful if members of the public visit a freelancer’s place of work, or the freelancer works in people’s homes.
• Professional indemnity insurance: If a freelancer sells their skills, advice, or service this insurance protects against a mistake or bad decision that costs their customer money in either lost revenue or to put right. Architects, accountants, solicitors, designers, consultants, and other professionals who are paid for their expertise should consider this type of coverage.
• Contents insurance: Protecting against damage or destruction of equipment, furniture, computers, or other items that can be expensive to replace. Those with a high value or high volume of inventory can take additional stock insurance in case goods or lost, stolen, or damaged. Generally, frozen food and wear and tear are not covered here.
• Employers’ liability insurance: If a freelancer does employ someone, even temporarily, this is a legal requirement in most cases.
• Business use car insurance: This is an essential car insurance add-on if a freelancer uses their car for work, such as driving to see clients. Car insurance can become invalid if a vehicle is used for work and ‘business use’ is not declared.
• Cyber insurance: For freelancers worried about being attacked by hackers, getting a virus or being the victim of other cybercrimes. This insurance can provide access to expert assistance, cover lost revenue and direct costs incurred by the freelancer, and cover compensation claims for affected third parties (e.g., if a freelancer inadvertently forwards an email with a virus to a client that causes damage).
• Personal accident insurance: Many freelancers take out this cover as it provides financial assurance if injury or illness prevents them from working. The insurance can pay a weekly benefit to help with lost income in the case of temporary or minor injury or illness, or a lump sum for more serious situations.
• Legal expenses and tax investigation insurance: For freelancers who fear they would not be able to cover legal costs should they need assistance with debt recovery, contract disputes, employment disputes, tax investigations, failed health and safety inspections, and more.
After deciding upon the insurance policies they need, a freelancer can then begin searching for coverage.
There are 3 routes to finding cover: comparison sites, brokers, and going directly to an insurer like Direct Line or AXA.
Comparison sites can be a good place to start if you’re unfamiliar with the market, as they can connect you with multiple providers (which may be a combination of both brokers and insurers).
According to NimbleFins, public liability and professional indemnity quotes for a freelancer can start from around £50 each, so costs are not prohibitive. Of course, for riskier professions, the costs will be higher, in particular for professional indemnity insurance.
Freelance insurance brokers
Brokers typically charge fees, but they have access to insurers who don’t sell direct to consumers and they can be brilliant for answering questions and explaining the market.
They’re particularly useful when a freelancer is having trouble finding cover, for instance, in the case of professional indemnity insurance, which is a tight market at the moment.
What is the difference between an insurance broker and an agent?
Roughly speaking, brokers work for the customer and agents work for an insurance company.
When going directly to an insurance company, the agents you speak to do not work for you, they work for the insurance company. That means they’ll only be quoting you for products from the company they work for, which may not be the most competitive rates in the market.
On the other hand, insurance brokers work for the client to source the best cover at the cheapest prices amongst the many insurance companies they work with.
Insurance brokers are starting to react to the rise of freelancers and the so-called side hustle to help the self-employed get the best deals.
While this is still a developing industry, there are a few professions where a whole freelance insurance package is available, such as the entertainment and media industries which have relied on freelancers for years.
Packages can include public liability insurance, annual business travel insurance, personal accident insurance, and contents insurance. But with packages, a freelancer must make sure the options offered do cover all risks presented by their specific role.
Compare freelance insurance quotes
When attempting to create your freelance insurance package, it can feel overwhelming to know where to start. Firstly think about the policies needed, then go to providers or a comparison site to explain what you need.
Sites like Simply Business, QuoteZone, GoCompare, and NimbleFins offer business insurance comparison services.
Consider the number of reviews when making your assessment as a small number of reviews are less reliable than a provider with hundreds. As well as the average rating, take a look at some of the poorer reviews to see if any red flags are raised.
A freelancer must make sure they have read the policy documents carefully to understand the exclusions and limits that apply. They should check with clients to ensure all limits and coverage meet any expectations they may have.