A guide to employer’s liability insurance for freelancers

Even the best-prepared client of Freelancer Accounting’s (http://www.freelanceraccounting.com) accountants in Richmond and the wider Surrey area will occasionally get something wrong – it’s just a fact of life, and it’s why insurance exists to provide some peace of mind and financial compensation for any mistakes made that necessitate it.

There are types of insurance, such as IR35 insurance, income protection insurance and business interruption insurance, which may only apply to certain freelancers or be an optional extra rather than essential. But which insurance is it essential for freelancers to have? Well, it’s difficult to see past employers’ liability insurance. With employers having legal responsibility for the health and safety of their employees while they are at work, employers’ liability insurance covers the cost of any compensation and legal fees for workers who can attribute an injury or illness to their work for you.

Not only is it morally imperative for you to take out employers’ liability insurance as a freelancer, but it’s also legally required, with some exceptions. You will not need to take out this cover if you are exempt from the Employers’ Liability (Compulsory Insurance) Regulations 1998. One example of an exempt business is a limited company that employs only its owner, who has more than 50% of the issued share capital. Nor are family businesses required to take it out, as long as all employees are close relations of the owner, such as husband, wife, civil partner, mother, father, son or daughter – although this exemption is not applicable to those family firms incorporated as limited companies.

It may have crossed your mind to engage a substitute or enter into a contract with a substitute clause, in which case it is vital to accurately clarify whether, for the duration of the contract, this substitute may be considered as your employee. A legal practitioner should be able to assist you with this.

Our accountants in London would always urge clients to ensure that they have met the minimum legal requirements – or more specifically, that insurance covers at least £5 million of employers’ liability insurance, courtesy of an approved supplier – of which the FCA maintains a list. It is also necessary for an employer to display their employers’ liability insurance so that all employees can see it – whether in electronic or physical form.

The Health and Safety Executive (HSE) urges businesses to maintain a complete record of employers’ liability, given the potential for diseases to develop decades after exposure to their cause, possibly leading the worker to make a claim against their employer at the time. Clients of our accountants for freelancers should also be reminded that at any time, HSE inspectors can request to see their certificate of insurance. Fines can be imposed for lack of insurance or the failure to produce a certificate.

For more freelancer-related advice, visit the website at http://www.freelanceraccounting.com).

Editor’s Note: Freelancer Accounting (http://www.freelanceraccounting.com) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.