More and more people in the UK are self-employed, but according to a study by multinational insurer AXA, a large number of them operate without basic insurance cover.
According to the study, only 35% of the 330 self-employed professionals interviewed have professional indemnity insurance, which covers any mistakes in their work. In contrast, 83% of 320 tradesmen are covered by public liability insurance for accidents, injuries, and property damage that can arise from their line of work.
One common reason why freelance professionals tend to eschew insurance is the myth that claims cannot come from desk-based work. Half of freelance professionals thought they don’t need insurance because they cannot cause injuries. However, they disregarded that financial or reputational damage to their clients may happen and the fact it is covered by insurance.
One in ten professionals was unaware of professional indemnity insurance, and 12% mistakenly assumed it is cover for accidents and injuries.
AXA provided several costly examples that may arise from mistakes committed by freelance professionals:
- IT contractor mistakenly transferred £10,000,000 in company money while testing out a new system
- A consultant left a laptop containing sensitive data, such as a list of a well-known company’s employees and their redundancy payments, on a train
- Accountant makes a mistake quoting the price of a company’s assets, leading to a loss of £22,000
Darrell Sansom, managing director of AXA Business Insurance, advised businesses and self-employed professionals, “… if customers rely on their advice, it’s likely they need professional indemnity cover. Do your research first though – your professional body, financial adviser and insurer can all confirm whether you need it or not.”