Sole traders have unique requirements and ways of working which means some types of business insurance are more suited towards them than others. There are high risks when running a business on your own, and if you’re unable to work or your equipment is damaged, then there are no additional parties that can cover your business while you’re unable to work. Business insurance aims to protect you in the event of a high-risk scenario affecting you.
The information in this article is presented as an example of the types of insurance sole traders may wish to consider. If you are considering purchasing business insurance, we advise that you speak to an independent industry expert.
The goal of your sole trader business insurance should be to help you recover from any situations that may restrict or remove your ability to operate. Some insurances will be a legal requirement, such as employing additional staff, and other insurance may be needed when working with certain companies, such as public liability insurance. Understanding the risks involved with running a sole trader business and specifically operating within your industry, you will be able to make the best decisions on which types of insurance you will need.
There are many different types of business insurance that cover various aspects of any company. There may be some overlap between what is covered in some cases, so it’s important to understand what each type of insurance offers. You should aim to purchase a combination of insurance policies that cover you for your most prominent risks without paying out for any cover that you won’t find value from. The types of insurance best suited to your sole trader business are entirely unique to your company and line of work, so applying your own knowledge of your business and its risks will help you understand which is right for you.
Public liability insurance is intended to cover businesses for claims made against them by a third party. This could be anyone from another sole trader you’re working with, a member of the public, or your client. It’s useful for businesses of all sizes, and it will cover the costs of expenses such as legal fees and compensation payouts in the event of a claim being made. Public liability insurance is also sometimes a requirement for some businesses to work with other companies, meaning that not only does it offer protection, but it can also open your sole trader business up to new opportunities.
Professional indemnity insurance covers businesses against claims made against them because they have not provided an adequate service, which has then resulted in a loss for the client they were working for. Examples of this are clients not agreeing that the service you provided is up to standard, or you offered them advice that resulted in financial loss for their company. This type of insurance will cover you for any legal fees and compensation payouts you’d be liable for in the event of a claim being made against you. Many sole traders hold their reputation in high regard and it can often be the reason for success, but in the event that you work for a client that doesn’t agree with your standard of work, professional indemnity insurance may help to cover you.
Product liability insurance can be helpful for sole trader’s who are selling products in a store or online. This type of insurance is designed to cover you for the cost of compensation if someone or their property is damaged due to the product you have sold them. For example, if you sell an appliance that when used damages the user or their property, they may make a claim against you. This type of insurance is geared more towards physical sellers than sole traders who are selling a service.
Cyber insurance protects businesses in the event that their data, systems or software is hacked or breached. This may result in the sharing of sensitive information, including that of your customers and clients. Cyber insurance will help to cover the costs of finding the route cause of the issue, recovering lost information, and for financial losses that occurred and any damages you have to pay in compensation. Sole trader businesses that are processing and storing a lot of information and data may find that cyber insurance is a worthwhile expense compared to the losses that will occur in a data breach.
Although sole traders often operate alone, there are instances where you might hire in the short or long term. Employer’s liability insurance is a legal requirement for any business that is employing in the UK, up to the minimum value of £5 million. This type of insurance will help you cover the costs that would arise if an employee claims against you, such as being injured due to the work they carry out for you.
If you’re unable to work due to illness, then income protection will provide you with regular payments in place of the income you would otherwise receive. Income protection insurance is designed to support businesses if they’re unable to work in the event of illness. As a sole trader, you’re the primary operator of the company, which means that illness could result in an inability for your business to operate and meet its clients' needs. This presents a high financial risk, and income protection insurance is often considered to be a good option for sole trader businesses.
If your sole trader business relies on the use of equipment, such as tools, machinery or electronics, then the loss of this equipment can present a large risk to your business's ability to operate. Tools and equipment cover will cover your equipment for the loss, theft or accidental damage, and can help you to replace equipment so that you can return to work as soon as possible.
Business interruption insurance is designed to cover business in the event of disasters occurring, such as fire and floods. It will cover businesses for the loss of equipment or damages caused to buildings and any financial losses that occur as a direct result of the disaster. This type of insurance may be best suited to companies that carry product inventory, such as e-retailers, who are at an increased risk if their office or warehouse becomes damaged and their stock is destroyed, leaving them in a situation where they cannot carry out their usual duties.
If your building, its contents, or your equipment is damaged due to a scenario out of your control, then this type of insurance will cover you for the repair or replacement. You can purchase each type of insurance in isolation or look for a combined policy that protects all of your physical items and the location you work from. It can help you to recoup the costs required to get up and running again should you need to claim. Many sole traders will work from home, and in cases, home insurance will not cover business buildings or items, so it’s worth considering both types of cover.
Business insurances are designed to cover all aspects of your sole trader company that pose a risk if they’re affected. However, one such aspect of your company that is often overlooked is the physical mail. If you lost your post due to an accident or were unable to access it for any length of time, how would this impact your ability to communicate with mail senders and operate your business?
Many companies are adopting a remote mail management solution, which removes all of the risks associated with loss of access to mail. This is achieved through a combination of a virtual address and mail management system. The final solution means that you will never have to receive your mail or handle it in person physically. Instead, you’ll be able to access and fully manage your post from anywhere you are. Here’s how it works:
When considering the implications of the loss of access to post as part of your business risk plan, it can become apparent how important it is to your operations. Physical post remains a critical communications tool for sole traders and large businesses across the globe, and if you’d like to learn more about digitising your mail, we welcome you to get in touch.
As a sole trader or freelancer, there will be times where you need to provide an address. In these scenarios, you may not want to or be able to provide your personal address. Find out how virtual offices can help.
Software can help small businesses to save time and improve their offering. We’ve listed 23 of the most popular options to review and consider.
Learn how to turn your skills into a successful freelancing career. Our guide covers everything from defining your expertise and setting your rates to marketing yourself and finding new opportunities.
Outsource your mailroom and automate the way your business handles its post. Find out about our digital mailroom service and the benefits it could offer to you.
With Covid-19 continuing to put pressure on businesses to operate remotely, we’ve written a guide for some of the key considerations a company should be aware of.
If you’re thinking of using your home address for your business, you should understand what this really means for both your company and your private home address.
Self assessment tax returns are used by HMRC to calculate whether you owe any tax on earnings you’ve received. Learn about what it is and how to file one.
Memorandum and articles of association are required documents for all limited UK companies, and contain information about the business from share allocation to day-to-day responsibilities.
Registering your UK business for VAT is sometimes voluntary and other times required depending on your revenue. Learn more in this blog post.
A virtual address makes for a great influencer mail solution, allowing content creators to manage mail online whilst retaining their privacy.
This article explores whether or not changing from a Limited Company to a Sole Trader is possible, & what the potential advantages are of doing so.
This article explores what registering your business will mean for you as a sole trader, what the benefits of registering a business are, & why to consider it.
This article explores the different steps required to register a company & how UK Postbox’s services can help you with your registered business address.
We answer what the main remote working risks & processes you need to be aware of are, & what your GDPR remote working policy should look like.
Digitising your business comms is the way forward; this blog will explore the types of business communication & the advantages of digital communication.
A Bring your own Device (BYOD) policy lets employees use their own devices for work. Read on to learn more about how to implement proper BYOD Policy.
Need help working from home? Here you’ll find the best software for remote working, with solutions for communicating with the team & planning your days.
This guide covers what remote working means for staff, sole traders, SMEs & corporations, taking into account physical & emotional needs & best practices.
In this post we’ve explained how a virtual address can be used when signing up for services such as Google My Business and Google Adsense.
Understanding what KYC is & what information you may be required to provide when signing up to services can help you prepare for the application process.
Learn about business mail redirection and how UK Postbox has developed a solution to entirely digitise your mail management process.
If you’re a remote worker, it can be hard to replicate office life in a personal environment. Here are some tips to help you get by and stay productive.
In this guide, we’ve covered everything you need to know about setting up a limited company within the UK and some considerations for your business.
Considering starting an e-commerce business? Here’s what you should consider before getting started, & some tips for the platforms you could be selling on.
Considering registering as a sole trader? Here’s what to prepare, the responsibilities you’ll be taking on and how to apply.
Knowing how to shop online safely can help to secure your private data, & with Christmas around the corner, it’s important to read up on common tactics.
Dropshipping & fulfilment services are a perfect way to start your ecommerce journey. Find out what they are & how to get started with this business model.
As of September 14, 2019, there are new rules in place for processing payments. These checks have been instated to boost security of user transactions.
It’s recommended that businesses have an efficient & secure mail process in place. We’ve looked at how you should organise your business mail in this blog.
CN22 & CN23 customs declarations are required when sending goods outside of the UK through the Royal Mail. Learn what they are & how they’re used here.
For anyone looking to start an online business, we’ve covered some of the basic do’s and don’ts to help you get started and remain competitive online.
If you’re considering entering the buy-to-let business, read some of our top considerations. It’s never too late to take the step in the rental market.
An EORI number, or Economic Operators’ Registration & Identification number, is used by customs to monitor trading between EU and non-EU countries.
Flexible working is on the up! Did you know that in the UK alone, one in seven employees now works from home on a regular basis?
