Business Insurance for Sole Traders: What You Need

Why Sole Traders Need Insurance

As a sole trader, you have unlimited personal liability. If something goes wrong — a client claims you gave bad advice, someone is injured on your premises, or your equipment is stolen — you are personally responsible. Insurance protects you from financial ruin.

Some types of insurance are legally required. Others are optional but strongly recommended.

Essential Insurance

Public Liability Insurance

Covers you if a member of the public is injured or their property is damaged as a result of your business activities. Essential if:

• You visit client premises
• Clients visit your premises
• You work in public spaces

Many clients and venues require proof of public liability insurance before they will work with you.

Professional Indemnity Insurance

Covers you if a client claims you gave negligent advice or made an error that caused them financial loss. Essential for:

• Consultants and advisers
• IT professionals
• Designers and creatives
• Accountants and bookkeepers
• Any profession where your advice or work product could cause client losses

Employer's Liability Insurance

Legally required if you employ anyone, including casual or part-time staff. Covers claims from employees who are injured or become ill as a result of their work. The minimum cover is £5 million.

Recommended Insurance

Contents and Equipment Insurance

Covers your business equipment — laptop, tools, stock, office furniture. Particularly important if your equipment is essential to your livelihood and expensive to replace.

Business Interruption Insurance

Covers lost income if you cannot work due to an insured event (fire, flood, major equipment failure). Useful for businesses that rely on specific premises or equipment.

Cyber Insurance

Covers you against data breaches, hacking, and other cyber incidents. Increasingly important for any business that handles client data digitally.

Income Protection Insurance

Not business insurance per se, but essential for sole traders. Pays a proportion of your income if you are unable to work due to illness or injury. Since you have no employer sick pay, this is your safety net.

Tax Treatment

Business insurance premiums are an allowable expense against your self-employment income. Keep receipts and include them in your annual expenses.

Personal insurance (life insurance, personal income protection) is not a business expense.

Track your insurance costs and all other business expenses with Accounted.

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Protect yourself and your business. Sign up for Accounted and let Penny track all your business costs, including insurance.