What Are the Risks When You Are Self Employed?
Being self-employed can be extremely rewarding, give you control over your career doing something you love but it’s not without its risks. In the absence of an employer, you may face several financial risks but there are products in place to help you lessen those risks
As a self-employed professional you are vulnerable to common business risks and will, therefore, require the same protection as any other business. Depending on the nature of your business you will need to consider taking out multiple kinds of cover.
There are some insurances you will be legally obligated to take regardless of what type of business you run. However, if you are self-employed it may be worth considering specialised self-employed insurance as it is tailored to cover for the potential risks that are relevant and commonplace for the self-employed professional.
What are the risks?
Being self-employed means that any risk you face will directly impact you, all though being self-employed can be highly rewarding it often comes with much higher risks. Some of the risks to consider could be;
Illness. If you become ill your business is likely to suffer so it is important to consider how to protect your business without putting it at risk. You may want to consider Critical illness cover, with this type of policy in place you will be financially covered should you be diagnosed with a critical illness. It is important, however, to understand that critical illness policies do not cover all illnesses.
Liability. Like any other business, you will still be at risk of a public or employee liability claim. As a self-employed professional, you will undoubtedly have customers or clients of some variety. liability cover will help you deal with the legal costs of a claim or pay compensation to the person making the claim. Public liability insurance is not mandatory by law but is often a contractual requirement as your clients may want to ensure you have adequate protection in the event of an accident involving them or a third party.
Cyber and Data Risk. You will more than likely be using a computer system as part of your daily business. If you are storing customer data or any sensitive or confidential information including financial you will want to look at protecting that data against the risk of cyber-attack. Cyber insurance and privacy policies cover a business’ liability for a data breach in the event customer data is compromised.
An accusation of negligence or substandard work. As a freelancer, the financial consequences of a client suing you would be crippling for your business professional indemnity insurance can help cover the cost of legal action and settling a claim.
There are many risks you may face as a self-employed individual, risks that are likely to be far more damaging they would be for larger businesses. It is import to understand what your risks are and protect yourself accordingly against them.