Sole traders enjoy a certain freedom that isn’t afforded other business owners. They don’t have to worry about shareholders or a board of directors. However, this means that the main burden of protecting their business falls on them and that’s why it is essential to have sole trader public liability in place.
Perhaps more so than for any other type of business, public liability insurance is an absolute must for a sole trader. In some cases, it can make the difference between a company staying afloat or going under. Public liability is designed to fight your corner if you have had a claim made against you by a customer or member of the public.
Claims can be made for a number of reasons. If a customer or another person has been injured or fallen ill as a result of the work that your company carries out, they may seek compensation. Likewise, if a person claims that their property has been damaged, they make seek to recover the cost of the repairs from you. As a sole trader, the liability falls on you and so public liability cover will help you contest any such claim and pay out any compensation that is awarded to the claimant.
Even if the claim is ultimately rejected, your public liability insurance will help towards the legal costs involved in defending your company.
Professional indemnity insurance
Most public liability policies for sole traders will include professionals indemnity cover. A lot of sole traders are self-employed consultants, such as financial advisors, and dispense advice. If a customer follows your advice, suffers a loss and then decides that your advice was poorly dispensed, they may seek compensation. Advice can range from what investment to make or what product to use.
Similarly, if you are a hands-on tradesman, a customer may decide that your work isn’t up to scratch and sue for professional negligence. They may decide that they have suffered financial loss due to your work and take a case.
Professional indemnity will protect your interests in all of these cases by helping you contest any claims made against you.
Limits & excesses
All sole trader public liability insurance policies will come with an indemnity limit, that is the maximum amount your insurer will pay out to settle any single claim. Indemnity limits are usually £1 million, £2 million and £5 million, and depend on the size of your operation or the perceived risk involved.
All policies also come with excess, which is the amount you will have to pay out of your own pocket towards any claim. This figure is usually around £250, but again that can vary between policies.