What insurance should you think about when you’re self-employed?

Insurance makes more sense when you start with the problem it needs to solve. A client making a claim, stolen equipment and being too ill to work are different risks. So they may need different cover.

Separate the main types

Professional indemnity can cover qualifying claims about mistakes, negligence or advice in your professional work. Public liability is about claims such as an injury, or damage to someone else’s property, that come from your business activities. Equipment cover and other business policies can deal with different losses. What’s covered, and what’s excluded, depends on the policy. MoneyHelper: business insurance.

Check what your professional body and your clients ask for, as well as what the law requires. Public liability isn’t compulsory for everyone, but some activities require it.

Employing someone changes the questions

Once you become an employer, you’ll usually need employers’ liability insurance by law. There are some specific exemptions. In Great Britain, the cover must be at least £5 million and come from an authorised insurer. Check the rules for your business and where it’s based. GOV.UK: employers’ liability insurance.

Protecting your own income is a separate decision

Income protection can replace part of your income if illness or injury stops you working, depending on the policy. There’s usually a waiting period before it pays out, limits on what it pays, and a definition of what counts as being unable to work. It won’t replace lost income just because clients stop booking. MoneyHelper: income protection.

How long could your cash cover essential bills? Compare that with any waiting period. If your income goes up and down, check how you’d prove it, and what happens if your earnings drop before you claim.

Read around the headline price

Before you buy, ask:

• what’s covered

• what’s excluded

• how much the excess is

• what the claim limit is

• how long payments could continue

Check whether your home or vehicle insurance covers business use. Don’t assume a personal policy automatically covers the way you work. MoneyHelper: business use and insurance.

A good place to start is a short list of the losses you couldn’t comfortably cover yourself. Then compare suitable policies, or speak to a regulated insurance adviser. The aim isn’t to buy every type of cover. It’s to understand where the gaps are.