Essential Business Cover

Businesses and self-employed trades people in the UK are advised to have Public Liability Cover but in nearly all cases Employer's Liability Insurance is mandatory if there are any employees. Claiming that these employees are self employed does not necessarily give exemption, because whether or not the law considers them to be self employed or not depends on the precise nature of the relationship. If materials are provided to them or they are instructed where to work, and when, they are likely to be considered as employees and even if they are self employed for tax purposes they could still be classed as employees meaning that Employment Liability Insurance should be in place to cover them. Depending on the trade, Product Liability Insurance is also often times recommended for those who deal with product sales or distribution. These trades insurances are sensible ways for anyone who is self-employed to lower risks that could ultimately ruin a business. Those in the trades business include contractors, plumbers, grounds workers, shopfitters, carpet cleaners, hairdressers, electricians, carpenters, surveyors and others, seamstresses, tailors and many other manual occupations.

Public liability protects a self-employed trades person against any claims of injury to a third party or damages to someone's property. Employment liability is a legal necessity when one or more than one employee is hired and covers liability in case of an employee's injury, illness or death.

Although employers' liability insurance is mandatory in most cases, public liability insurance is not. However, although it is not considered compulsory, most self-employed tradesmen have public liability to ward off any claims that might arise and put their business in jeopardy.

Public Liability Insurance standard limits are usually 1, 2 and 5 million depending on how much coverage is desired. Typically, a company will purchase a policy with coverage set at .6 million. Most of the larger contracts or local authority contractors will demand that coverage is set at approximately 6.5 million.

If a tradesman works outside of his home or frequently works with the public, the more insurance cover the better. For example, it is particularly important for those in the building trades to have public liability insurance in order to protect the business with enough coverage in case of death or injury to a third party or a third party's property. Many tradesmen find that before a job starts proof of Public Liability Insurance must be shown in order to carry out the job and be paid. More people hiring tradesmen are demanding that workers be covered should anything go wrong.

There are examples of self-employed tradesmen facing public liability charges in local newspapers every day. The company must compensate for injuries or losses for negligence should a customer enter a company owned business and fall, or if a product was improperly installed and caused injury to a user. Whether a company is found liable or not, there are still untold expenses incurred including lawyer fees and time consumed addressing the case. These are just a few examples of why public liability insurance is important.


If a self-employed tradesman does not have public liability coverage, any compensation awarded on a victim's behalf must be paid, and the courts go after assets like vehicles, home and other property. With the safety net of insurance, the coverage will take care of most of the claim, which could run into thousands upon thousands of UK pounds. Keep in mind that Public Liability Insurance will not cover any employees in the event they are injured. This falls under Employer's Liability Insurance.

Compulsory insurance under employment liability insurance became a legal requirement in 1972. There was a time in the UK when any company, sole proprietor or not, needed employers' liability insurance, but this was recently changed and freed many sole traders from the obligation. If you are the sole owner, or directly employ close family members (ie not under a limited company), you do not need the insurance. However, if there is one or more non family member staff employed, and an employer does not have liability insurance, fines can run as high as 2.5 thousand each day there is no coverage. Employers' liability insurance is mandatory and takes care of a businesses' compensation costs and legal fees. Even if a business is no longer operating, a former employee injured on the job can and will often seek compensation if the injury was due to the employer's negligence. This may also apply to any self-employed staff or volunteers regardless of the number of hours they work. Since 2007, the legal minimum amount of coverage required for damages and injuries to employees suffering illness, disease or injury during employment is 5 million. Most companies opt for 10 million or more. Employers must have their Employment Liability Insurance certificate on display where employers are covered under the policy.

If a business owner has employees that work in the UK or offshore, employment liability coverage is necessary. If there are employees working outside of the UK, insurance coverage may not be mandatory, unless they work 14 days at a time in the UK or offshore but employers are urged to check the country's laws where the employees are stationed, because insurance may be warranted for the protection of your staff.

Many UK insurance companies recommend that in addition to Public Liability and Employer's Liability Insurance, self-employed trades people include Product Liability Insurance as part of their insurance package. If a company sells a product or manufactures a product, product liability protects the owner should a user suffer personal injury or property damage because of a defect in the product. If negligence is demonstrated in the way a product has been stored, sold or checked for quality, even if the business did not manufacture a product in question, that business can still be charged as responsible for the incident. That's why adding product liability is recommended for any self-employed trades person.

To find insurance solutions for businesses or self-employed trades people, the best place to start is the Internet. The UK insurance networking system provides a user in search of public, employment and product liability insurances the ability to research the types of coverage available and to receive competitive quotes from several companies immediately. Insurance websites are available 24 hours a day and allow users to review packages and plans, compare quotes, purchase and receive policy copies via the Internet. Look for companies that are registered in the UK (England) and are regulated by the Financial Services Authority (FSA).  If your needs are complex you may need to consider a commercial combined insurance package.


Copyright 2011 All Rights Reserved