Managing Liability Insurance When You’re Self Employed

Being self-employed comes with a lot of freedom as well as responsibility. It means having more control over the hours you work, and holding yourself accountable for working those hours. It provides you with the ability to take on clients and expand your business on your terms. However, being self-employed also means assuming the risks and reputation of the business itself. As a contractor or small business owner, any negligence or accident caused by your actions can lead to a lawsuit that can cripple your business, your livelihood, and your brand. Fortunately, public liability insurance can shield you from the fees, expenses, and compensatory payments that result from such litigation.

How Public Liability Insurance Works

A basic public liability insurance plan covers self-employed individuals or contractors from any injury or property damage incurred by a third party. The personal injury portion aims to protect your business should any harm come to client due to your actions. This also includes any claims made by the NHS for hospital treatment. The property damage portion covers any damage to equipment or personal property, as well as the resulting cost to claimant should that property be vital to their daily operation.

For example, if an IT engineer were to spill coffee on a server and cause irreparable damage, the business would not only need to replace the server, but also be forced to suspend a significant portion of their operations while their network was down. The aggregate cost could escalate into the millions of pounds, which is why most small businesses and contractors must rely on insurance when such an incident occurs. In fact, in the UK many tradesman are required to have public liability insurance of £1 million, £2 million, or £5 million in order to legally conduct business. In short, public liability protects you against the following:

  • Lawsuits due to personal injury or property damage
  • Legal fees and expenses associated with a claim
  • NHS claims regarding hospital treatment and ambulance charges

Pros and Cons

Depending on your profession, the risk of a lawsuit may vary. For electricians, construction workers, and plumbers, public liability insurance may seem like an obvious part of operating a business. The opportunity for damage while working directly with a client’s property presents too great a risk to go without it. Similarly, hairdressers, massage therapists, and individuals who actively engage their customers and expose them to various products should also protect themselves with some form of insurance. However, for other professions, the risk may not appear substantial enough to justify the monthly premiums.

Nevertheless, a single incident is all it takes to induce a lawsuit that cripples your business. Simply meeting with a client and having them slip on a wet floor, or spilling a drink on their lap could provide grounds for a lawsuit. In addition, low risk generally translates to lower premiums, as most actuaries base their premiums on the likelihood of a claim being filed. Public liability insurance can also be packaged with other insurance options to provide more savings.

Moreover, having a reliable public liability insurance typically is an important part of creating trust between you and the client. Many clients will even refuse to do business with independent contractors that do not have an adequate public liability policy. The relatively low cost coupled with the peace of mind of having protection make having a strong public liability cover an important part of running a business.

Types Of Landlords Insurance Available

Your rental property is technically a commercial business. As such, it should provide you with a source of revenue that covers your costs and brings a profit. However, with any business, if that revenue stream is cut or delayed, the only thing you are left with is an enormous amount of cost which can threaten your financial health and livelihood. For landlords, losing rental income, incurring property damage, or fighting a lawsuit can result in substantial losses.

As a result, Anyone who rents or leases a living space should consider taking out landlord insurance. Having insurance will help protect your investment and cover you in areas where traditional home-owners insurance will not suffice.

Why Obtain Landlord Insurance?

Over forty percent of property in the United Kingdom is under-insured. This is because many landlords mistakenly believe that their home insurance will cover them in the event a tenant damages their property or fails to pay rent. The benefits of landlord insurance includes but is not limited to:

  • Cover for a flat, a rental home, or bungalow – Any damage caused by a tenant is generally covered by landlords insurance.
  • Commercial and residential bundled together for cheaper rates – Landlords insurance is often packaged together with your residential home insurance to allow for more savings.
  • Cover for loss of rent – If a tenant were to abruptly leave, or if you were forced to remove them as a result of damage to your property, you would lose out not only on the cost of repairs, but the monthly rent that should have been paid while the domicile was being fixed. Landlords insurance would cover those costs.
  • Liability claims – If a tenant were to file a claim for an injury or damage to their personal property as a result of your negligence, landlords insurance would cover the cost of any medical bills and legal expenses in fighting the claim.

The Cost of Landlords Insurance

The cost of any insurance depends largely on the amount of risk the policy provider will undertake. For landlords, this generally means the larger the building, the higher the premiums. However, the contents inside will factor into the overall valuation, as well as your claim history and the postcode of your property.

Why Should I Buy Landlord Insurance?

Anyone who owns a property that is used for commercial reasons should purchase landlords insurance. While there is very little cost associated with insurance, the potential losses can be catastrophic. Considering how large your capital investment is, it is important to protect it with adequate insurance.

Building and Contents Insurance

With most insurers, the contents portion of the policy can be tailored to your individual needs. Tenants may not properly care for your furniture, carpets, and other furnishings, and you may wish to cover these items if they are of significant value. Conversely, you may choose a lighter policy if the most expensive items are the building and the land itself.

Given the flexibility of a landlords insurance policy, it is important to talk with a broker or insurance expert regarding what kind of cover your property requires. Tailoring your policy can lower your premiums while at the same time giving you extensive cover on the things you value most. Insurance will also allow you to rent out your property without having to constantly worry about the condition of your belongings.

As a landlord, you are often asked to accept a tenant without knowing what condition they will leave your property in when they leave. With landlords insurance, you don’t have to take on that risk by yourself.

Getting Started With Liability Insurance

Starting a new business can be both exciting and extremely harrowing. As the success of your business often hinges on those first few months, you may be looking for ways to maximise your profit margin and limit expenses. However, it is important to keep in mind that one area you should not neglect is obtaining the proper insurance.

Liability insurance is designed to protect your business from a lawsuit resulting from injury to a third party or damage to their property. Given the rising cost of medical bills and legal fees, it is not impossible for a single incident to not only bankrupt your business, but threaten your financial security for years to come. As such, the last thing you want is for your business to survive the early growing pains that plague many start-ups, only to be ruined by an accident that is out of your control.

What is Liability Insurance?

Liability insurance comes in a variety of forms. Depending on the type of business you run, you may opt for one or more of the following policies:

  • Public Liability Insurance – This is designed to cover you in the event of an injury to a third party or member of the public. It covers the medical costs suffered by the claimant, including hospital bills, ambulance rides, and NHS claims. Any legal fees associated with fighting the claim are also covered by the insurance company, up to the agreed upon limit. Most public liability policies cover anywhere between £5 to £15 million.
  • Employers’ Liability Insurance – This provides the same coverage as Public liability, but covers claims made by your employees as opposed to those made by customers or the general public. The two packages are often bundled together for businesses that need coverage for both.
  • Professional Indemnity Insurance – This type of insurance is designed for professionals
    who are in the business of giving advice. Financial advisers, medical professionals, and other technicians can be sued if their counsel is deemed negligent. For example, if a financial adviser suggests a person nearing retirement should invest in high risk stocks, this could be interpreted as negligent advice should those stocks fail.

What Type of Cover Do I Need?

The type of cover you require depends on what kind of business you run. A self-employed individual will have no need for employers’ liability, whereas someone who works at home may not require public liability insurance. However, if your job requires meeting clients or doing contract work out in public, you run the risk of being sued for any grievances you may cause.

For example, if you are a computer technician and spill hot coffee on a client’s servers, that could not only result in being liable for the cost of replacing them, but the loss of business and revenue that occurs while the equipment is being replaced. For this reason, most insurance plans offer cover in the millions of pounds. While the risk may seem minimal, having cover gives you the peace of mind to know that a single accident will not jeopardise your livelihood.

It’s also important to note that many liability plans offer flexible coverage. As not every business is the same, your risks may not be tantamount to the risks of your peers. Discussing your options with a licensed adviser is important before you choose an insurance policy. There may be other methods to reduce your risk, such as installing safety measures, having special safety training, or simply raising the amount of your excess. Many insurers offer a no claims bonus as well to businesses that have a strong safety record. Contact the various insurers and ask them about ways to reduce your premium.