Compare self-employed and sole trader insurance

Self-employed insurance is a set of business covers for people who work for themselves. Most sole traders start with public liability, then add professional indemnity, tool cover or employers’ liability if the work calls for it.

On Quotezone you can line up quotes from UK providers with one form, then choose the covers that fit your trade.

In law there’s no gap between you and a sole trader business. GOV.UK calls this unlimited liability: the business’s debts are your debts, and it says business insurance may give you more protection (GOV.UK).

What does self-employed insurance cover?

There’s no single policy with that name. Sole trader insurance is a mix of separate covers that you pick to match your work, or buy together as a package. The main ones are:

• Public liability: claims from members of the public for injuries, or for property damage your work caused (business.gov.uk). Compare it on our public liability insurance page.
• Professional indemnity: claims that your professional work, designs or recommendations lost a client money. See professional indemnity insurance.
• Employers’ liability: compulsory once you take someone on, with a minimum of £5 million of cover (GOV.UK).
• Tools and equipment: loss or damage to the kit and stock you rely on to work (business.gov.uk).
• Product liability: if goods you make, sell or supply hurt someone or make them ill (business.gov.uk).
• Legal expenses: some policies add help with the cost of disputes, such as an unpaid invoice or a contract claim.

If you rent a workspace or hold stock, business contents insurance can cover the things you own there.

Is self-employed insurance a legal requirement?

Usually not, unless you employ staff or drive for work. Two covers are compulsory for some sole traders. Under the business.gov.uk list, you need employers’ liability once anyone works for you, and motor cover for any vehicle you drive for the business.

Public liability isn’t compulsory, but a client, venue or council contract may ask for it. Some professions have regulators that expect professional indemnity (business.gov.uk).

Any car or van needs at least third party insurance to be driven on UK roads (GOV.UK). If you drive for work, tell your insurer, because a personal policy may not include business use.

Sole traders, freelancers and limited companies

The covers are the same whichever way you trade, but the risk to you is different. A limited company is legally separate from its owners, who are responsible for its debts only up to what they invested (GOV.UK).

A sole trader has no such limit, so a large claim against the business is a claim against you. That’s why liability cover matters more when you work alone.

Freelancers and contractors should read each client’s contract before buying. Agencies and larger clients may set a minimum level of public liability or professional indemnity.

Running a limited company? HMRC doesn’t treat you as self-employed, even if you’re the owner and only employee (GOV.UK). The company buys its own cover, and directors and officers insurance can protect you as a director.

Who buys cover as a sole trader?

Anyone who trades on their own account. GOV.UK says you’re likely to be trading if you sell regularly to make a profit, make items to sell, or are paid for a service you provide (GOV.UK).

• builders, plumbers, electricians and other trades (tradesman insurance)
• consultants, designers, writers and other professionals who sell their time
• people who make or sell goods at markets, online or from home (home business insurance)
• couriers and drivers who deliver for platforms (courier insurance)
• beauty, fitness and wellbeing practitioners (salon insurance)

You can also be employed and self-employed at the same time (GOV.UK). If you run a business alongside a job, check that the work you do for yourself has its own cover.

How much does self-employed insurance cost?

There’s no standard price, because each cover is priced on your own risk. Insurers usually look at:

• the work you do and where you do it
• your turnover and whether anyone works for you
• the cover limits you pick, for example £2 million rather than £1 million of public liability
• the value of your tools, stock and equipment
• your claims history and the excess you agree to pay

Every premium includes Insurance Premium Tax, which has been 12% at the standard rate since 1 June 2017 (HMRC).

An example

As an illustration, take a self-employed web designer who works from home and meets clients in cafes. Professional indemnity is likely to matter most, because a mistake could cost a client money.

Add public liability for client meetings and cover for a laptop, and the designer has a small, simple set of policies. If they later hire an assistant, employers’ liability becomes compulsory (GOV.UK).

Do I need employers’ liability if my family helps out?

Not always. GOV.UK lists the relatives you can employ without it, from a spouse or civil partner to parents, children, grandchildren and siblings (GOV.UK).

HSE says that exemption is lost if the family business is a limited company (HSE). Employ anyone outside the list and you must hold cover of £5 million or more, with fines of £2,500 for each day without proper insurance (GOV.UK).

How to compare quotes on Quotezone

Fill in one short form with your trade, turnover and the covers you want. UK providers on the panel then get in touch with quotes for you to compare sole trader insurance side by side.

Before you buy, business.gov.uk suggests checking what each policy covers and excludes, its limits and any conditions you must meet (business.gov.uk). Compare the cover as well as the price.

Start your self-employed insurance quote in a few minutes.

You might also need

If you use a van for work, compare van insurance. And if illness or injury stopped you working, income protection insurance can pay part of your income.