Do self-employed people need insurance UK?

There is no legal requirement for insurance if you are a sole trader with no employees and do not use a vehicle for work. However, public liability insurance is essential if you work on client premises or interact with the public, and professional indemnity is critical if you provide advice or services. Many clients require proof of insurance before hiring you.

What insurance do I need as a self-employed tradesperson?

Tradespeople should have public liability insurance (covers injury or damage to third parties), employer's liability if you have employees or use subcontractors, tool cover, and possibly professional indemnity. Public liability of £1–5 million is standard. Many trade bodies and clients require proof of insurance.

How much does self-employed insurance cost UK?

Public liability insurance starts from around £40–£100 per year for low-risk businesses and £100–£300 for trades. Professional indemnity ranges from £100–£500 per year depending on your profession and turnover. Income protection costs from around £20–£60 per month depending on your age, occupation, and cover level.

Is public liability insurance a legal requirement UK?

No, public liability insurance is not legally required. However, it is effectively essential for most self-employed people because many clients, venues, and contracts require it. It protects you if a third party is injured or their property is damaged as a result of your work. Without it, you would be personally liable for any claims.

Self-Employment Guides UK — Tax, Business Setup, and Running Your Own Business

Business Insurance for Self-Employed — What Do You Actually Need?

Which insurance do self-employed workers need? Public liability, professional indemnity, income protection, and more — what's required and what's optional.

By PocketWise · 25 March 2026 · 4 min read

Self-employment tax and business information is based on current HMRC rules. This is not tax or accounting advice. Consider consulting a qualified accountant for your specific circumstances.

As a self-employed worker, there is no employer to provide insurance or sick pay. You are responsible for protecting yourself, your income, and your business. This guide explains which insurance is essential, which is optional, and which is a waste of money.

Types of Business Insurance

Public Liability Insurance

Detail	Information
What it covers	Injury to third parties or damage to their property caused by your work
Who needs it	Anyone who works on client premises, meets clients, or works with the public
Typical cover level	£1 million to £5 million
Typical cost	£40 – £300 per year
Required by law?	No, but many clients and contracts require it

Example claims
You accidentally damage a client’s property while working	Covered
A customer trips over your equipment	Covered
You spill paint on a client’s carpet	Covered
Your own equipment is damaged	Not covered (that is your risk)

Professional Indemnity Insurance

Detail	Information
What it covers	Claims against you for professional negligence, errors, or bad advice
Who needs it	Consultants, designers, IT professionals, accountants, surveyors, anyone providing advice or services
Typical cover level	£100,000 to £1 million
Typical cost	£100 – £500 per year
Required by law?	No, but required by some professional bodies and most corporate clients

Example claims
A client alleges your advice caused them a financial loss	Covered
Your design work contains an error that costs the client money	Covered
A software bug in your code causes business disruption	Covered
The client simply does not like the work	Not usually covered

Employer’s Liability Insurance

Detail	Information
What it covers	Employees who are injured or become ill because of their work
Who needs it	Anyone who employs staff, including temporary workers and some subcontractors
Typical cover level	£5 million minimum (legal requirement)
Typical cost	£50 – £200 per year
Required by law?	Yes, if you have employees
Penalty for not having it	Up to £2,500 per day without cover

If you use subcontractors, check whether they are genuinely self-employed. If HMRC considers them to be employees, you need employer’s liability cover.

Income Protection Insurance

Detail	Information
What it covers	Replaces a portion of your income if you cannot work due to illness or injury
Who needs it	All self-employed people (you have no employer sick pay)
Typical cover	50–70% of your income
Typical cost	£20 – £60 per month
Waiting period	Usually 4, 8, 13, or 26 weeks before payments start
Duration	Pays until you can work again or until retirement

Self-employed workers receive no Statutory Sick Pay. If you cannot work, your income drops to zero. Income protection is the most important personal insurance for anyone self-employed.

Other Insurance to Consider

Insurance	Who needs it	Typical cost
Tool and equipment cover	Tradespeople, photographers, musicians	£50 – £200 per year
Cyber insurance	IT, web, and data-handling businesses	£100 – £500 per year
Product liability	Anyone who sells physical products	£50 – £300 per year
Business premises/contents	If you have a workshop, studio, or office	£100 – £500 per year
Commercial vehicle insurance	Anyone using a vehicle for business	£500 – £2,000 per year
Key person insurance	Businesses reliant on one person	Varies
Business interruption	Protects income if business is disrupted	£100 – £500 per year

What Insurance Do You Need by Profession?

Profession	Essential	Recommended
Builder / tradesperson	Public liability, employer’s liability (if you have staff)	Tool cover, income protection
Consultant / advisor	Professional indemnity	Public liability, income protection
IT freelancer / developer	Professional indemnity	Cyber insurance, income protection
Photographer / creative	Public liability, equipment cover	Professional indemnity, income protection
Personal trainer / therapist	Public liability, professional indemnity	Income protection
Shop or market trader	Public liability, product liability	Business premises insurance
Delivery driver	Commercial vehicle insurance	Public liability, income protection
Virtual assistant / admin	Professional indemnity	Income protection

How Much Does It Cost?

Annual Insurance Costs by Business Type

Insurance	Low-risk (consultant)	Medium-risk (tradesperson)	Higher-risk (roofer, electrician)
Public liability (£1m)	£40 – £80	£80 – £200	£150 – £400
Professional indemnity (£250k)	£100 – £200	N/A	N/A
Employer’s liability	N/A (no employees)	£50 – £150	£100 – £250
Tool cover	N/A	£50 – £150	£80 – £200
Income protection	£240 – £720/year	£300 – £720/year	£400 – £900/year
Total annual estimate	£380 – £1,000	£480 – £1,220	£730 – £1,750

All business insurance premiums are tax-deductible as a business expense, reducing your Self Assessment tax bill.

How to Get the Best Deals

Tip	Details
Compare quotes	Use comparison sites like Simply Business, Hiscox, or PolicyBee
Bundle policies	Buying multiple types together is often cheaper
Increase your excess	A higher excess (£250 instead of £100) can reduce premiums
Pay annually	Monthly payments often include interest charges
Review annually	Do not auto-renew — shop around each year
Only buy what you need	Do not be upsold on unnecessary cover
Declare honestly	Non-disclosure can void your policy entirely

Tax Treatment

Rule	Details
Business insurance premiums	Tax-deductible business expense
Income protection premiums	Not tax-deductible (BUT payouts are tax-free)
Life insurance (personal)	Not tax-deductible
Relevant life insurance (through company)	Tax-deductible for limited companies

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