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February 23, 2024

Freelancers Insurance 101: what does it all mean?

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Freelancers Insurance 101: what does it all mean?
Table of contents

Our insurance partner, Superscript, is offering one month of free cover* for UK-based freelancers. 

There are many great perks to freelancing and top of the list is probably the freedom to pick and choose the projects you want. But alongside the pros of managing your own time, there’s also some downsides, like the endless admin... 

One biggie on the admin to-do list is probably insurance, like professional indemnity. Not many freelancers think they need it, but if things go wrong, without proper cover, you could be liable. 

That’s why we’ve worked with our partner, Superscript to help you learn more about business insurance and help you decide which cover is best for your freelance business. 

Let’s get stuck into these business insurance basics.

Glossary of business insurance terms 

Let’s start with some simple terms. The likes of premium, cover, limit and excess will be familiar if you’ve ever taken out any kind of insurance before. But have you thought about what they mean? 

Premium

A premium is the amount you pay for your insurance policy. It’s that simple. Some companies, like Superscript, let you choose whether to pay your premium on a monthly or annual basis, which is pretty nifty.

It’s worth noting that different things, like the industry you specialise in, the profit you turnover and where you’re based can affect your premium and how much it costs. The types of insurance you choose and the amount you cover yourself for will also determine how much your premiums are.

Covers

Covers are the different insurance policies protecting you from different types of risks. When choosing your insurance, it’s important to think about the risks you’re likely to face and make sure your insurance policy includes the relevant covers. 

The right business insurance is all about balance and getting the right cover that makes sure you’re properly protected without unnecessarily overpaying.

Limits

A limit is the maximum amount of money your insurer pays out if you make a successful claim. When taking out insurance, you might typically choose from a few limit options. And because different covers usually have different limits, it’s normal that you could end up with a policy that contains multiple limits.

Excess

An excess is the amount you have to pay towards the overall cost of an insurance claim. When settling a successful claim, you’ll be liable for the (usually) pre-agreed amount and your insurer will contribute the rest up to the limit of the cover. The first bit that you pay is known as your excess. 

For example, let’s say you’re paying £10 a month for a cover that has a £1,000 limit and a £100 excess. You make a successful claim for £950, meaning that you’ll need to pay the first £100, and your insurer will pay the remaining £850.

Exclusions

Not everything is covered. These parts are called exclusions, which are specific risks or circumstances that are explicitly not covered. 

It’s important to check what’s excluded before purchasing cover because exclusions vary from one insurer to the next.

Do I need business insurance – and why?

Only one type of business insurance is usually required by law in the UK, and that’s employers’ liability insurance. While most insurance isn't a legal requirement, many businesses consider the risk of being unprotected to outweigh the cost of insurance. 

What's more, certain clients and professional organisations require that you have cover, so it's a good idea to check this with your industry body or regulator.

What insurance do I need in the UK?

The type and level of insurance you need depends on the risks you face as a freelancer. Some types of cover you might want to consider as a freelancer include: 

Professional indemnity insurance

Mistakes in your work that could cause clients to lose money can be covered by your professional indemnity (PI) insurance and could pay your legal fees, as well as compensation awarded to the client. PI may also protect you against copyright infringement, unpaid client fees and reputational damage. You might see this cover referred to as errors and omissions insurance.

Business equipment insurance

Whether your business relies on everyday equipment or specialist gear, business equipment insurance can pay for repairs and replacements if your kit gets lost, stolen or accidentally damaged. Business equipment can usually cover portable items like laptops and phones, as well as more specialist equipment.

Cyber insurance

Data breaches, cyber attacks and hacking are just some of the risks that come with using technology – and they can affect anyone, not just large tech businesses.

Cyber insurance can protect you from these risks, covering legal fees, compensation claims, and costs related to notifying those affected. It can also provide cover for extortion, breaches of data protection laws and financial losses caused by system downtime.

Public liability insurance

Accidents happen. So, when those mishaps injure a person or damage their property, public liability (PL) insurance can help cover your legal fees and compensation costs.

Employers’ liability insurance

Mentioned earlier, employers’ liability (EL) insurance is a legal requirement for most businesses employing members of staff. Your employees can be full-time or part-time, permanent or temporary, and even apprentices. The only potential exemptions are if your employees are close family members or are based abroad.

Bear in mind that as a freelancer (or sole trader), the chances of needing EL are slim. If you consider hiring another freelancer – even temporarily to work on a project with you – it’s worth checking with your insurance provider to see if they’d be classified as an employee and need cover.

Commercial legal protection

Facing legal disputes, tribunals or tax enquiries often requires the support of professionals. Fortunately, there’s commercial legal protection which can cover legal fees and provide access to professional expertise for businesses. This includes a legal and tax helpline in the event of a claim or dispute.

What’s not covered by an insurance policy?

Exclusions are specific risks or circumstances that are explicitly not covered by your policy. They will often vary from one insurer to the next, so it’s important to check what’s excluded before purchasing cover to avoid any nasty surprises.

When should I get business insurance?

Every business is different, but you’ll typically want insurance when you’re ready. The unfortunate truth is that you can be exposed to risks before your business is even fully up and running. 

For example, when starting a business, you’re probably going to need some kit. There’s a chance that your brand new equipment could get lost, damaged or stolen before you’ve even taken on your first client.

What research can I do?

When choosing a provider for your business insurance, a little research goes a long way. Some key factors to consider include: 

Range of cover

Your risks as a freelancer are likely to be few, but if you deal with certain clients, make sure a prospective insurer can cover you and any subsequent hazards you might face.

Reviews

What are previous or existing customers saying? These experiences can offer useful insight into what an insurer does well… and perhaps not so well. Have a look at websites such as Trustpilot to hear from real customers. Also, keep an eye out for claims reviews to give you an idea of how they’re dealt with.

Regulation

The Financial Conduct Authority (FCA) regulates insurers and brokers, and you should be able to find evidence of this on an insurer’s site. 

Also, look out for insurer rating scores. A score of A or higher from trusted agencies means they've been independently assessed and have an excellent ability to pay out claims.

Contact and support

Some people prefer to send an email, while others like to pick up the phone. Look out for insurers that can be contacted in a way that works for you.

Top tips for getting the right insurance

You might still be asking yourself what steps you can take to get the right level of cover. To get an accurate quote – and make sure your cover is fit for purpose – you need to provide correct information. 

Double-check your information

To get a quote, you’ll typically need to tell your insurer:

  • Your business structure
  • What your business does
  • Your turnover
  • Where your business operates
  • Who works for the company
  • Whether you currently have cover 
  • If you do currently have cover, provide your renewal date.

Update your cover regularly

Once your cover is set up, it’s easy to forget about it until the next bill or renewal. But regularly reviewing and updating your cover can help make sure your insurance remains valid.

For example, you might need to revisit your cover if you change the types of services you offer, take on staff or expand your business into another country. If you don’t tell your insurer about these changes, you could be left under-insured.

Remember, business insurance is tax-deductible

HMRC considers all business insurance premiums to be 'allowable expenses’, so you can write them off against your taxable income when completing a tax return. Just remember to keep a record of your payments as proof.

Want to learn more about Superscript?

You can learn more about insurance and our partner Superscript, by heading to our website. With Superscript, you can:

  • Pick the covers you need, leave what you don’t
  • Pay monthly or annually, it’s your choice
  • Tweak your policy at any time, with no admin fees
  • Get five-star customer service and claims support from a UK-based team
  • Get a tailored quote and be fully covered in minutes.

 Enro Ltd t/a Superscript is authorised and regulated by the Financial Conduct Authority.  FRN 656459.

Professor Passionfruit Illustration
Table of Contents

Our insurance partner, Superscript, is offering one month of free cover* for UK-based freelancers. 

There are many great perks to freelancing and top of the list is probably the freedom to pick and choose the projects you want. But alongside the pros of managing your own time, there’s also some downsides, like the endless admin... 

One biggie on the admin to-do list is probably insurance, like professional indemnity. Not many freelancers think they need it, but if things go wrong, without proper cover, you could be liable. 

That’s why we’ve worked with our partner, Superscript to help you learn more about business insurance and help you decide which cover is best for your freelance business. 

Let’s get stuck into these business insurance basics.

Glossary of business insurance terms 

Let’s start with some simple terms. The likes of premium, cover, limit and excess will be familiar if you’ve ever taken out any kind of insurance before. But have you thought about what they mean? 

Premium

A premium is the amount you pay for your insurance policy. It’s that simple. Some companies, like Superscript, let you choose whether to pay your premium on a monthly or annual basis, which is pretty nifty.

It’s worth noting that different things, like the industry you specialise in, the profit you turnover and where you’re based can affect your premium and how much it costs. The types of insurance you choose and the amount you cover yourself for will also determine how much your premiums are.

Covers

Covers are the different insurance policies protecting you from different types of risks. When choosing your insurance, it’s important to think about the risks you’re likely to face and make sure your insurance policy includes the relevant covers. 

The right business insurance is all about balance and getting the right cover that makes sure you’re properly protected without unnecessarily overpaying.

Limits

A limit is the maximum amount of money your insurer pays out if you make a successful claim. When taking out insurance, you might typically choose from a few limit options. And because different covers usually have different limits, it’s normal that you could end up with a policy that contains multiple limits.

Excess

An excess is the amount you have to pay towards the overall cost of an insurance claim. When settling a successful claim, you’ll be liable for the (usually) pre-agreed amount and your insurer will contribute the rest up to the limit of the cover. The first bit that you pay is known as your excess. 

For example, let’s say you’re paying £10 a month for a cover that has a £1,000 limit and a £100 excess. You make a successful claim for £950, meaning that you’ll need to pay the first £100, and your insurer will pay the remaining £850.

Exclusions

Not everything is covered. These parts are called exclusions, which are specific risks or circumstances that are explicitly not covered. 

It’s important to check what’s excluded before purchasing cover because exclusions vary from one insurer to the next.

Do I need business insurance – and why?

Only one type of business insurance is usually required by law in the UK, and that’s employers’ liability insurance. While most insurance isn't a legal requirement, many businesses consider the risk of being unprotected to outweigh the cost of insurance. 

What's more, certain clients and professional organisations require that you have cover, so it's a good idea to check this with your industry body or regulator.

What insurance do I need in the UK?

The type and level of insurance you need depends on the risks you face as a freelancer. Some types of cover you might want to consider as a freelancer include: 

Professional indemnity insurance

Mistakes in your work that could cause clients to lose money can be covered by your professional indemnity (PI) insurance and could pay your legal fees, as well as compensation awarded to the client. PI may also protect you against copyright infringement, unpaid client fees and reputational damage. You might see this cover referred to as errors and omissions insurance.

Business equipment insurance

Whether your business relies on everyday equipment or specialist gear, business equipment insurance can pay for repairs and replacements if your kit gets lost, stolen or accidentally damaged. Business equipment can usually cover portable items like laptops and phones, as well as more specialist equipment.

Cyber insurance

Data breaches, cyber attacks and hacking are just some of the risks that come with using technology – and they can affect anyone, not just large tech businesses.

Cyber insurance can protect you from these risks, covering legal fees, compensation claims, and costs related to notifying those affected. It can also provide cover for extortion, breaches of data protection laws and financial losses caused by system downtime.

Public liability insurance

Accidents happen. So, when those mishaps injure a person or damage their property, public liability (PL) insurance can help cover your legal fees and compensation costs.

Employers’ liability insurance

Mentioned earlier, employers’ liability (EL) insurance is a legal requirement for most businesses employing members of staff. Your employees can be full-time or part-time, permanent or temporary, and even apprentices. The only potential exemptions are if your employees are close family members or are based abroad.

Bear in mind that as a freelancer (or sole trader), the chances of needing EL are slim. If you consider hiring another freelancer – even temporarily to work on a project with you – it’s worth checking with your insurance provider to see if they’d be classified as an employee and need cover.

Commercial legal protection

Facing legal disputes, tribunals or tax enquiries often requires the support of professionals. Fortunately, there’s commercial legal protection which can cover legal fees and provide access to professional expertise for businesses. This includes a legal and tax helpline in the event of a claim or dispute.

What’s not covered by an insurance policy?

Exclusions are specific risks or circumstances that are explicitly not covered by your policy. They will often vary from one insurer to the next, so it’s important to check what’s excluded before purchasing cover to avoid any nasty surprises.

When should I get business insurance?

Every business is different, but you’ll typically want insurance when you’re ready. The unfortunate truth is that you can be exposed to risks before your business is even fully up and running. 

For example, when starting a business, you’re probably going to need some kit. There’s a chance that your brand new equipment could get lost, damaged or stolen before you’ve even taken on your first client.

What research can I do?

When choosing a provider for your business insurance, a little research goes a long way. Some key factors to consider include: 

Range of cover

Your risks as a freelancer are likely to be few, but if you deal with certain clients, make sure a prospective insurer can cover you and any subsequent hazards you might face.

Reviews

What are previous or existing customers saying? These experiences can offer useful insight into what an insurer does well… and perhaps not so well. Have a look at websites such as Trustpilot to hear from real customers. Also, keep an eye out for claims reviews to give you an idea of how they’re dealt with.

Regulation

The Financial Conduct Authority (FCA) regulates insurers and brokers, and you should be able to find evidence of this on an insurer’s site. 

Also, look out for insurer rating scores. A score of A or higher from trusted agencies means they've been independently assessed and have an excellent ability to pay out claims.

Contact and support

Some people prefer to send an email, while others like to pick up the phone. Look out for insurers that can be contacted in a way that works for you.

Top tips for getting the right insurance

You might still be asking yourself what steps you can take to get the right level of cover. To get an accurate quote – and make sure your cover is fit for purpose – you need to provide correct information. 

Double-check your information

To get a quote, you’ll typically need to tell your insurer:

  • Your business structure
  • What your business does
  • Your turnover
  • Where your business operates
  • Who works for the company
  • Whether you currently have cover 
  • If you do currently have cover, provide your renewal date.

Update your cover regularly

Once your cover is set up, it’s easy to forget about it until the next bill or renewal. But regularly reviewing and updating your cover can help make sure your insurance remains valid.

For example, you might need to revisit your cover if you change the types of services you offer, take on staff or expand your business into another country. If you don’t tell your insurer about these changes, you could be left under-insured.

Remember, business insurance is tax-deductible

HMRC considers all business insurance premiums to be 'allowable expenses’, so you can write them off against your taxable income when completing a tax return. Just remember to keep a record of your payments as proof.

Want to learn more about Superscript?

You can learn more about insurance and our partner Superscript, by heading to our website. With Superscript, you can:

  • Pick the covers you need, leave what you don’t
  • Pay monthly or annually, it’s your choice
  • Tweak your policy at any time, with no admin fees
  • Get five-star customer service and claims support from a UK-based team
  • Get a tailored quote and be fully covered in minutes.

 Enro Ltd t/a Superscript is authorised and regulated by the Financial Conduct Authority.  FRN 656459.

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Professor Passionfruit Illustration

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