What is public liability insurance for self-employed professionals?

Public liability insurance is strongly recommended for anyone who is their own boss. If something happens to a member or members of the public as a result of your work – like an accident, injury or property damage – then you’re liable for legal fees, expenses, and compensation pay-outs. A legal claim could cost you anywhere from a few hundred pounds to tens of thousands, or even higher.

These kinds of legal issues could have a significant impact on your business, potentially leading to a damaged reputation and loss of work. As a result, self-employed public liability insurance is a key form of safeguarding your livelihood.

In this guide, we outline what public liability insurance covers, who it protects, and what to consider when taking out this type of policy.

What sets public liability insurance apart for self-employed professionals?

Public liability insurance is recommended for all companies, from multinational corporations to one-person enterprises, but often the self-employed may find themselves more uniquely vulnerable when compared to bigger businesses.

Why are self-employed people more vulnerable than bigger businesses?

For the self-employed, their livelihoods rely on being able to work and earn an income, which could become challenging or impossible if they’re the recipient of a compensation claim. In addition, a self-employed person can – and often has to – wear many hats, which means there is more of a range of potential liabilities.

For example, one individual’s business could simultaneously involve:

• Going to clients’ homes or business premises
• Customers visiting your home or place of work
• Selling products or services to customers.

Every environment presents a risk. Take the example of a self-employed builder; they may be on a construction site one day, and working in a client’s home the next.

Main types of self-employed people who should consider public liability insurance

Anyone who runs their own business should think about taking out this kind of self-employed business insurance, from small business owners to freelancers, contractors, and sole traders. We’ve provided a list of some of the main professions that may benefit from PL cover:

• Tradespeople (like plumbers and electricians)
• Consultants and advisors
• Personal trainers
• Photographers and videographers
• Artists selling at fairs or online.

Are there other professions that should take out public liability insurance?

If there’s some form of public aspect to your business activities – for example, visiting clients at their business premises or your place of work – then it’s recommended that you take out this type of self-employed insurance. These include self-employed workers in the following industries:

• IT and technology
• Banking and finance
• Social care, health, and education.

What public liability insurance covers

PL insurance covers costs related to a third party suffering an injury or property damage as a result of your work. These costs include:

• Repairs and replacements if you damage someone’s property
• Compensation relating to property damage or loss, injury, loss of earnings, and stress or trauma related to the claim
• Legal costs to defend against the claim and pay legal expenses.

To illustrate how your business could face these costs, here are a few basic examples:

• A photographer damaging valuable property in a client’s place of work
• A plumber causing water damage in a customer’s home
• A graphic designer’s equipment prompting an electrical fault
• A plumber’s work affecting fibre cables leading to a loss of internet connection in an office.

In the next section, we explore some more hypothetical scenarios and results.

Imagined but insightful: public liability claim examples for self-employed professionals

We’ve provided some case studies which will help you to understand the real risk you could face as a contractor, and how public liability cover would be a lifeline in these types of situations.

Electrician’s error causes a fire

An electrician in Birmingham carried out a project where they installed a modern heating system in a shop. While they had considerable experience, they made a wiring error which then ignited a small fire. Thankfully, no one was hurt – but the damages racked up to £48,000 as a result of their oversight. Their public liability business insurance kicked in, which saved their business from serious financial implications.

Furniture assembler injures co-worker

In Manchester, a furniture assembler’s work caused injury to a fellow contractor when a wall-mounted cabinet they installed came crashing down. The medical expenses and loss of income were to the tune of approximately £26,000. Their self-employed insurance policy covered the vast majority of this cost, with the self-employed individual only needing to pay £200 out of their pocket.

Cleaner damage leads to compensation

A homeowner accused a professional cleaner in Bristol of damaging an expensive stovetop during a routine clean. The client demanded a significant amount of compensation, but their public liability business insurance provider stepped up, negotiating the claim to a reasonable amount.

Caterer faces a £10,000 claim for food poisoning

In Liverpool, a self-employed caterer was hired for a wedding reception. Unfortunately, several guests fell ill due to food poisoning. The event organisers sued the caterer for £10,000 to cover medical bills and the disruption to their event. Thankfully, the caterer’s public liability insurance kicked in, covering most of the claim and saving the caterer from a financial disaster.

Other insurance types that might complement public liability

Public liability isn’t the only type of insurance available for the self-employed. In fact, there are several other types of business insurance policies which can complement it by providing additional coverage for specific risks, like professional negligence, employee injury, cyber attacks, and business interruption.

These include the following:

• Professional indemnity insurance: covers claims made by clients for professional negligence or mistakes
• Income protection insurance: covers the costs of an injury or illness causing an inability to work and loss of income
• Employers’ liability insurance: covers claims made by employees for an injury or illness sustained at work
• Cyber and data risk insurance: covers the costs of defending and recovering from cyber attacks and data breaches
• Business interruption insurance: covers the financial losses incurred if a business is unable to operate due to an insured event, such as a fire or flood.

The specific insurance types that are complementary to public liability will vary depending on the nature of the self-employed person’s business.

For example, a self-employed accountant would likely benefit from professional indemnity insurance in addition to public liability insurance, while a self-employed builder with staff would likely need employers’ liability insurance in addition to public liability insurance.

What is professional indemnity cover?

Professional indemnity insurance safeguards against negligence claims – for example, if you made a mistake or gave poor advice to a client, resulting in them either having to pay money to resolve the issue or causing them financial loss.

These scenarios can manifest in a multitude of ways, such as losing documents, breaching intellectual property, and defamation and libel. The latter is more likely if you work in journalism, the media, legal services, or accountancy.

To help show how professional indemnity could be essential to your business, we’ve provided some further case studies below.

IT specialist’s delay triggers settlement

An IT consultant in Leeds faced a claim after their client experienced delays and technical issues while they were revamping their online store. The IT consultant’s insurance company helped mediate the situation with their PI cover responding to the claim, and both parties reached a fair settlement.

Logistics consultant faces copyright clash

A competitor accused a logistics consultant in Edinburgh of mimicking their unique business strategy. The rival demanded £160,000 in damages. Thankfully, the logistics consultant’s PI insurance covered the legal fees and settlement costs.

Web designer’s photo error causes client issues

A freelance web designer in Cardiff used stock photos for a client’s website. Unfortunately, they didn’t know that the images were under copyright, and the client got sued. The web designer’s PI insurance was there to help, covering the £8,000 settlement.

What is income protection insurance?

Income protection insurance covers you if you’re unable to work due to illness or injury. It’s particularly important as a self-employed individual because you’re not eligible for Statutory Sick Pay (SSP). This will ensure that you receive a regular monthly income.

We’ve provided a case study to demonstrate how income protection insurance could prove crucial.

Carpenter downs tools after back injury

A carpenter suffered a back injury whilst at home and was unable to work until they had an operation. There was a year-long waiting list for the treatment and a lengthy recovery time. As they had income protection insurance, the carpenter was able to receive monthly payments. This allowed them to pay their mortgage, bills, and other costs whilst they waited for the operation and recuperated afterwards.

What is a package policy?

Some self-employed workers may choose to take out an ‘insurance bundle’ or ‘package policy’. This is designed to provide comprehensive cover through each type of possible insurance the individual would need.

Here at Kingsbridge, we provide business insurance for contractors, freelancers, sole traders, and small business owners Through this, you can be assured that you’re protected against prospective damage, tax liabilities, or potential legal claims. Along with public liability, our package policy covers professional indemnity insurance, personal accident cover, employers’ liability insurance, and directors’ and officers’ liability.

What’s more, we have bespoke packages for specific industries, including media, trade professions, and banking and finance.

What are add-ons?

Add-ons are optional insurances and provide cover for additional things such as your business equipment. For example, aan IT consultant who needs a laptop may protect this via equipment cover.

How to choose your coverage as a self-employed professional

What level of cover do self-employed people need?

Self-employed insurance cover level really depends on your particular situation – specifically, the nature of your work. For example, public liability insurance cover is key for tradespeople working with the public.

If someone in professional services (like an accountant or lawyer) worked entirely from home, then this wouldn’t be as necessary – though a client could potentially injure themselves if they ever visited the worker’s home. It may still be a good idea to take this insurance out, but as this role typically poses less of a risk to the public compared to a tradesperson, a lower level of cover is normally required.

Your level of cover can also depend on the recruiter or end client you’re working with – they might dictate a certain amount before allowing you to work for them.

Tips for finding a suitable business insurance policy

We always suggest finding a public liability policy that works best for you, delivering both comprehensive coverage and value for money. Typically, the level of cover a PL policy provides should be a minimum of £1 million.

Along with potentially asking the recruitment agency or end client for their guidance, you can also look to those in your industry or other self-employed people you know. In addition, you can search online and use comparison tools to find self-employed insurance quotes.

We understand that value for money is incredibly important, so Kingsbridge offers a Price Promise to be able to offer the most competitive self-employed insurance package possible. In short, if you discover equivalent cover from another provider at a lower price, we’ll match the quote.

Key factors self-employed people should consider

It should be noted that a self-employed insurance policy depends on many factors. These include the following:

• Type of work, as this can determine the different risks and the level of them
• Operation scale – whilst you’re self-employed, bigger businesses will need to pay more for cover
• Industry norms – for example, in some industries like construction, it’s simply expected you would hold self-employed insurance
• Type of clients
• Requirements of specific clients or recruitment agencies
• Level of contact with the public
• Any employees you have
• Value of any assets
• Previous claims history.

Is public liability cover a legal requirement for self-employed people?

This type of liability insurance isn’t legally required, but it’s highly recommended as it protects your business if there’s ever a situation which could trigger the need to pay compensation claims or high legal fees.

What’s more, it may be mandatory when you work with specific end clients or recruitment agencies; for example, a recruiter may not let you start work until you hold the correct levels of insurance. This is because of vicarious liability, which is where the supervisory party (in this case, the recruitment agency) is liable for the work carried out by the party that they’re responsible for – in this situation, the self-employed individual.

As a result, they’d be held liable for any professional negligence.

Self-employed insurance with Kingsbridge

Public liability cover plays a crucial role in operating as self-employed. It provides you with a safety net and the assurance that, if there’s ever a claim made against you, the related costs will be taken care of and your business shouldn’t suffer significant ramifications.

It’s recommended that you take out this type of insurance – along with any other relevant types – as soon as you start working for yourself. This is because risks can occur from this point. The sooner you have coverage, the sooner you can have peace of mind.

To learn more about your self-employed insurance options and receive professional advice on the matter, please get in touch with the experts here at Kingsbridge.