Property insurance covers you if your property is accidentally damaged or stolen. This property could be your business premises, or it could be your equipment and stock. You should ensure you insure for the full value of your property because you may be penalized if you are found to be underinsured in the event of a claim.
If you’re a mobile trader operating mainly on customer premises, it’s important to make sure that your equipment and stock are covered while it’s away from your business address.
Liability insurance covers you if a compensation claim is made against you. As well as paying any compensation awarded, it also pays any legal fees and associated expenses incurred as a result of the claim. Your liability insurer will also handle the claim on your behalf, so you don’t need to worry about complex legal issues.
Compensation claims can be expensive to settle, so this is an essential type of insurance. Relatively minor injuries can result in five-figure settlements, and more serious injuries can cost ten times as much.
Employer’s liability insurance is a legal requirement if you have any employees. It covers compensation claims made against you by your employees.
Public liability insurance is not a legal requirement, although you shouldn’t consider trading without it because of the potential for substantial compensation claims to be made against you. This type of liability insurance covers compensation claims made against you by members of the public.
Product liability insurance is similar. However, rather than covering compensation claims arising from things you have done or failed to do, product liability insurance covers you if a compensation claim is made against you due to a defect in a product you have sold or supplied.
You should make sure that your public and products liability insurance contains a financial loss extension because otherwise, purely economic losses could be excluded from the cover, as most public and products liability insurance only cover compensation where injury or damage is involved.
You should also make sure that your public liability insurance includes a treatment risk extension. A standard public liability insurance policy will not cover professional acts. That could mean that claims that arise due to your performing services would not be covered.
Legal expenses insurance
Compensation claims aren’t the only form of legal action you could find yourself involved with. Other types of legal action could be:
- Disputes with clients or neighbors
- Employment tribunals
- Criminal charges brought against you
- Tax/VAT investigations
All of these types of legal action can result in large legal bills. Legal expenses insurance covers you against these unexpected legal bills. Your legal expenses insurance will also be able to advise and help you deal with any unexpected legal action.
Personal accident insurance
As a self-employed trader, you don’t get sick pay in the same way you would if you were employed by someone else. If you cannot work because you’ve been injured, you’re unable to work, but the bills still need to be paid at the end of each month.
Personal accident insurance protects you if you find yourself in this situation. It pays you a weekly benefit amount if you’re unable to work temporarily, and if you won’t be able to work permanently, it pays a lump sum. A death benefit is also payable if you die.