Self-employed workers are being warned to make sure they have business insurance or they could lose their home, after a survey revealed a million could be at risk.
There are more than 4m self-employed or freelance workers in the UK but a poll by Suited Insure found a third of small business owners were not adequately insured, leaving them vulnerable against claims.
The survey also found 24% of self-employed people had no insurance whatsoever with 7% stating they didn’t even know they could be insured.
A further 8% said they had some cover but no professional indemnity or public liability policy - the crucial insurances they need to protect them against being sued.
This could be a huge problem particularly for those operating as sole traders as they could end up losing everything they have, including their homes if sued by a disgruntled customer.
The risks for sole traders is greater than those operating as limited companies but many small business owners fail to appreciate the dangers.
The experts from Suited Insure say thousands of people have started small businesses over the past two years with the pandemic encouraging many to ditch their day job and go full time with side hustles.
They include hairdressers, personal trainers, bookkeepers, and business consultants, but huge numbers have failed to understand the need to insure themselves against possible legal action.
SMEs could face litigation if their work leads to injury to a customer or financial loss. They could also be sued by employees if they suffer an injury while working.
The experts advise all business owners to seek advice on professional indemnity and public liability cover.
Jana Kejvalova, of Suited Insure said: “There are millions of small business owners in the UK and the sector is the lifeblood of the economy.
“But our survey found around a quarter of them - about a million people - have no insurance cover whatsoever with many not even realising they could insure their business.
“This could be disastrous for them if something goes wrong and they end up being sued. For example if someone suffered an injury on their premises or if they made a mistake which cost someone money.
“People like bookkeepers and accountants need to be insured in case they made an error which caused a client to under or over pay their tax bill. Hairdressers need to be insured in case they accidentally snip a customer’s ear, and personal trainers must be insured in case their advice led to a client suffering an injury.
“If they are operating as sole traders the risks are so much greater as any future legal action could result in the loss of their personal assets such as, in the most serious cases, their home.
“That’s why we are encouraging all self-employed people to make sure they have the cover they need just in case the worst happens. It is far better to insure against it happening ahead of the event than to have to pick up the pieces afterwards.”
Jana Kejvalova continued: “Britain’s small business owners really are heroes to the UK economy but sadly they face huge amounts of stress and pressure.
“We want to make their lives a little bit easier by giving them one less thing to worry about. By making sure they are adequately insured they can operate without fear or concern.
“It is especially true of sole traders but also of small limited companies. No matter how large or small a business is, it needs to be protected against risk.”