Do You Really Need Insurance As A Freelancer?

SMEs Advice 22 August 2022
Do You Really Need Insurance As A Freelancer?

If you've worked hard to build your freelance business, it's only right that you work just as hard to protect it. Here's how cover such as freelance indemnity insurance can help you do just that.

Freelancing comes with a lot of exciting potential - and some not-so-exciting risks.

Unlike when you opt for a business model such as a limited company or umbrella structure, there's less protection for sole traders if things go awry, and you may be responsible for paying any fees and damages out of your own pocket.

Professional Indemnity (PI) cover can help protect you and your freelance venture should you run into challenges along the way. Plus, it could open up bigger and brighter opportunities for you as a self-employed professional.

In our latest blog, we explore whether you should opt for the investment, what it can help protect you against, and a few other ways to look at insurance.


Unpacking Professional Indemnity cover

If you're new to the freelance world, the thought of insurance might seem a bit alien to you, but the truth is, most self-employed professionals opt to take out some level of cover to help protect their business and give them peace of mind.

At its most basic level, Professional Indemnity insurance can help protect you if a client makes a claim that your consultancy, advice or work resulted in significant negative impact for them. That's typically a financial loss or reputational damage in some form or another.

But, it can also support you throughout contractual disputes - either those that a party makes against you, or that you make against a party. It can help with claims against copyright infringement, defamation or negligence, unpaid fees or legal fees, and much more depending on your level of coverage.

Looking at PI through this lens might make you realise that your freelance venture could be open to more risk than you initially thought - and why opting for cover now could do your future self a favour. 


Alternative coverage options

PI cover is far from the only insurance available to you as a freelancer. Depending on things like the industry you're in, the types of services you offer, equipment or products you hold, estimated revenue and other factors, you may wish to consider taking out more than one kind of coverage.

Have a lot of different equipment like phones, computers, documents, even furniture? That's costly to replace, so might want to protect against that. Good insurance will protect against anything from fires and floods, to theft and damage.

If you're a data handler or manager in your role, you would be strongly encouraged to take out cyber insurance to help give you - and your clients - peace of mind. Pretty invaluable when you think about how sensitive this data can be and how hefty the fines are should a breach occur.

Understandably, this might all seem like a lot of insurance, particularly if you're only a one-person-band. The good news is, some insurance suppliers will be able to provide you with a cost-efficient package, making the outlay and the leg work much easier to digest.


The choice is yours

To be clear: PI insurance isn't mandatory for freelancers. In fact, no type of insurance is mandatory for sole traders. In the UK, this changes if you are a registered employer, so there's nothing to say you can't choose to skip this step when you're setting up shop, or until you're ready to grow the team. Of course, it does open you to some risk.

When you're first starting out as a freelancer, it's extremely common to see a slight decline in your income, and/or an increase in your overhead costs. Hiring an accountant, investing in new tools and software, partnering with vendors, or if you're building a website - it can feel like a lot of expense.

But if you were to consider the potential fees, fines and stress that a claim against you - or one you have to make - might incur, it makes the comparatively small cost of good protection much more reasonable.


One less thing to think about

Peace of mind is worth its weight in gold. Particularly for freelancers with a whole host of competing priorities. And it's something we take seriously at Safenetpay. Our platform supports thousands of freelancers, startups and SMEs streamline their finances, easily conduct business overseas, and so much more. See what real customers had to say about their experience with our team, and discover why it could be the perfect one-stop solution for your needs.

Cookies help protect our website site and provide you with a better browsing experience. To find out more or to manage your own settings, click ‘Manage cookies’.

Cookie settings

Protecting your privacy

At Moneff we are fully committed to ensuring the privacy and security of everyone that visits or website is protected at all times.

For more information about how your privacy is protected please refer to our privacy policy.

If you have any additional questions, you can contact us at [email protected]

Strictly necessary cookies

Some of the cookies we use on your browser ensure that our website delivers you information securely - helping to keep you (and us) safe. You are unable to opt out of these cookies being applied when using our online services.

Site performance & analytics cookies

We use a number of tools that monitor visitor behaviour to help us continually improve the user experience.