ESSENTIAL INSURANCE: SOLE TRADERS
What Is A Sole Trader?
Being a sole trader is the simplest type of business to set up (as opposed to partnerships or limited companies). You are the company, you are responsible for the company’s debts and operations and you alone, the buck stops here. But, you do get to keep all of your profits after paying taxes, however you are also liable for any losses your business suffers.
According to the FSB, sole traders make up over 56% of all UK businesses. There are two types of sole traders when it comes to choosing the right insurance: those who buy insurance because their clients need them to have it and those who take out this cover because they know the risks they may face and feel more safer having it.
If you are self-employed, it’s likely that you are a sole trader, so what do you need to know about being a sole trader and your business insurance?
Public liability covers your businesses responsibility to 3rd parties. It helps to soften the effects of any financial loss your business might incur if a claim is made against you in that involves any loss or damage to property or people as a result of negligent acts you might find yourself inadvertently committing.
FSB Insurance Service recommends this cover for all businesses big or small.
You’ve made a mistake and given a client some bad advice, no one ever means to do this, but it can happen and now the client has lost money or worse your advice has caused them unnecessary cost. This is where Professional Indemnity insurance can help by protecting you from part or all of the costs of a claim brought against you.
Our Sales Direct Katie Freemantle says;
“Professional Indemnity will not cover you doing a bad job, or for ‘faulty workmanship’. If you’re installing a boiler that isn’t fitted properly and causes a gas leak, this will not be covered by Professional Indemnity.
Your business is growing, or maybe you’ve just landed a big job, so you need some helping hands. Employing staff when you have to can really help relieve the pressure of a large contract or high growth.
But, did you know if you employ any staff then you are legally required to take out Employer’s Liability Insurance. Don’t forget, any staff are your responsibility and not being properly covered in the event of an employee making a claim against you can be devastating for your business.
Your legal responsibility to your employees is covered under Employer’s Liability Insurance so, in the event of a claim, Employer’s Liability can help cover the cost of legal expenses (depending on your policy wording) and the claims monetary value.
Product Liability isn’t just for products you invent, it also covers products you might maintain, install or supply. If it becomes apparent a product you supplied or worked on causes loss, damage or injury. Product Liability Insurance can help you stay covered and protected.
All vehicles with an engine that are used on public roads in the UK need to be insured with Motor Insurance cover by law through the Road Traffic Act 1988. If you have a private car for your own use, it has to be insured, and it’s no different with vehicles used for your business.
So, you’ve decided to make a large claim, but this can be a long winded and difficult process, gathering together all of your evidence and paperwork, making sure it’s all formatted correctly, in fact it can become a task of Sisyphean proportions that ends up distracting you from your business, not great.
A loss adjuster would make everything much easier with a large claim, but they can be expensive and as they often charge on an hourly basis so the bill can rack up fast.
That’s why Loss Recovery Insurance can be a very helpful add on to your policy. Loss Recovery Insurance helps to cover the cost of expert advice in case of a large claim from a qualified loss adjuster.
Instead of being left with the risk of a protracted claim, with the clock ticking, and the bill growing you can take out Loss Recovery Insurance and pay a small amount alongside your normal premium.
If it becomes necessary to make a claim you will have be able to access to a certified loss adjuster who can help you maximize the value of your claim whilst working as an intermediary with your Insurer, for no extra cost above your premium.
Our Sales Director Katie says;
“FSB Insurance Service provides Lorega 25 exclusively for FSB Members. This gives you up to 25 hours of consultancy advice from a loss adjuster following all property claims over £5000.”
According to the UK Government North West Cyber Resilience Centre cyber-crime cost the UK economy £27 billion in 2021 heaping and average additional annual cost of £8460 on many businesses. A whopping 39% of UK businesses have identified security breaches or attacks in 2021, but only
13% of businesses are taking proactive action and training their staff in enhanced protective measures.
That’s why it’s more important than ever to utilise every means possible at your disposal to mitigate the damaging effects of phishing, malware, ransomware and potentially worse.
Cyber insurance can help you stay shielded from the negative results of various threats online.
Trade Credit insurance helps you stay protected from clients or suppliers who go under, by insuring a single or group of invoices, stopping you from being dragged down by a default. This can be protection for a single invoice or a whole client base, helping to give you peace of mind in an uncertain marketplace.
Office insurance provides cover for your computers, office contents, trade samples, business interruption and money as well as your Employers, Public and Products Liability exposure. Accidental damage and the full range of insured perils, including subsidence and flood cover is usually provided by an office policy.
It provides cover for your computers, office contents, trade samples, business interruption and money as well as your Employers, Public and Products Liability exposure.
Commercial combined insurance is the most common policy we see with SME’s who are registered with us. This is the swiss army knife of insurance, tailor made to your businesses needs. Normally, a commercial combined policy gives security to private companies who utilize staff, own premises and store office hardware on these premises.
A commercial combined policy is made up of different sections, each tailored to your business’ needs. It brings together sections that are sold as individual policies into one bespoke policy. A qualified FSB Insurance Service advisor can help you to understand what specialist cover your business requires and how this can be achieved.
Each policy is different, but common sections include:
- Material Damage
- Business Interruption
- Public Liability
- Product Liability
- Employer’s Liability
This is often the best type of policy for an SME, covering all of your needs in one place, making managing your insurance easy for you, and easy to account for.
Contractual Requirements You May Have
Sometimes you may need certain insurances arranged as per a contractual requirement. Examples could be insuring a building upon behalf of your landlord, or holding a certain limit of indemnity under public liability when working for certain third parties including local authorities.
Don’t miss out on landing that big client, check your contract and then contact your insurer to be sure you can take the job.
Extras That You May Wish You Had
Although the above covers the basics of what you might need to trade more safely, every business is unique and you might find that your specific circumstance requires extra cover.
For example if you are running a business with property that you rent out you might want to consider landlord insurance or if you are running a shop then some shop insurance might be necessary.
Other insurance packages you may find useful include, but are not limited to the following;
Talk to a qualified FSB insurance advisor to make sure you have the right cover for your business and protect yourself from being exposed should anything go wrong.