Why choose Howden for Sole Trader Insurance?
Here at Howden, we know how difficult and stressful it can be for tradesmen to find the insurance policies they need, and that’s why we do our best to instead, do the heavy lifting for you, so you don’t have to. Thanks to the brilliant relationships we have with our selected panel of both standard and specialist insurers, we’re able to make the process of sourcing various different sole trader insurance policy, on your behalf, simple and straightforward.
Our team of friendly experts understand that each sole trader insurance policy needs to be unique and tailored to the policyholder and their business. That’s why we provide a personalised service for our clients, which focuses on getting to know you and your business better, whilst also learning more about what you want from your sole trader cover.
So, what are you waiting for? Whether you need to make a claim, purchase a new sole trader insurance policy, or renew an existing one, just know that we’re always here to help.
Benefits of working with Howden:
- You can trust us – we’re rated Excellent on Trustpilot.
- We’re driven to save you time, money, and hassle.
- Benefit from a tailored service that comparison sites can’t provide.
- Speak with your local branch, within your community.
- We’re right by your side in the event of a claim.
Business insurance for sole traders and the self-employed
When running a business as a sole trader, you hold all of the cards, and with that, comes a great deal of responsibility. This includes taking on complete liability over the entire operation of the business and how it’s managed.
And that responsibility could come back to haunt you if something were to go wrong. What if one of your employee were to get injured? Or you make an unfortunate mistake whilst out on a job? Anyone could make a claim against you and your business, putting you on the back foot.
But that’s where sole trader insurance can help. This business insurance can provide the stability and protection that sole traders need in order to reap the benefits of taking the risks that come with operating a business.
What’s more, with Howden you can pick and choose what types of cover you want to include under your sole trader insurance policy. Whether it’s public liability insurance, professional indemnity insurance, or personal accident insurance, we have the insurances available to our clients to allow them to construct a tailor-made policy that’s right for them.
What insurance do I need as a sole trader?
There are over three million sole traders in UK, all of which require sole trader insurance in order to be able to operate their small businesses safely. We'd recommend that sole traders absolutely must-have public liability insurance, solely because of the way it can protect businesses from common third-party claims and compensation pay outs.
However, Howden has a wide range of business insurance policies available to choose from, each able to help build a comprehensive sole traders insurance policy package that's perfect for your own business.
In the event that you're blamed for property damage or an injury to someone.
Helps minimise the impact of mistakes and consequential compensation claims.
Support employees that suffer an accidental injury or are forced out of work.
Keeps everyone you've covered protected when the unexpected happens.
Protecting your belongings and business equipment is crucial.
Helps businesses with any legal fees they need to pay.
Cover for your business vehicle and its contents is invaluable for many sole traders. Goods in transit cover could also prove to be important.
How much will Sole Trader Insurance cost?
It’s hard to pinpoint exactly how much your sole trader insurance cover will cost you because insurance premiums are calculated based on the information you provide us. In fact, the price of your policy could vary depending on various factors, such as:
- The level and types of cover you opt to include
- The amount of policy excess you’re willing to pay
- Your previous claims history
- Whether you pay for the policy in a lump sum upfront, or in monthly instalments
It’s also important to note that each insurance provider we work with is different and will have their own policy premiums, so until we get the green light from you to help you find a sole trader policy that matches your criteria, we won’t know exactly how much you should expect to pay.
Ultimately, the best way to find out how much your sole trader insurance will cost is by contacting us. You can either click Get a Quote on our website, or give us a call on 01276 601 690, and from there a member of our friendly team will help you get a better understanding of how much your policy could cost.
With Howden, you also have the option to pay for your insurance policy via direct debit, if that's your preference.
Who do we also insure?
Not only can we help sole traders, but we can also offer cover for a wide range of other tradesmen, such as:
- Car Valets
- Contractors All-Risk
- Gardeners & Landscapers
- Gas Engineers
- Limited Companies
- Market Traders
- Painters and Decorators
- Tree Surgeons
- Window Cleaners
Want to learn more about insurance for sole traders? Have a read of the articles below that you can find on the Howden Blog!
- Sole Trader vs Limited Company: All the Info
- How to go Self-employed: Your Complete Guide
- How to register as Self-employed in the UK
Sole Trader Insurance FAQs
To put it simply, a sole trader refers to someone that is a sole owner of a business. The phrase is used to explain a business structure, much like you could describe a business as a ‘business partnership’ or ‘limited company’.
Of the different types of business structure, a sole trader is the simplest kind, meaning the individual is only responsible for paying tax on profits and taking on any losses that the business makes.
The terms ‘self-employed’ and ‘sole trader’ have very similar definitions but the main difference is that ‘sole trader’ is used to describe a business structure, whereas ‘self-employed’ can be used to describe someone that doesn’t work for an employer or pay taxes through PAYE.
This would mean that you can be both a self-employed professional and a sole trader, because both terms essentially refer to someone being the sole owner of a business.
Explaining it in a real-life scenario; a freelance electrician would be considered ‘self-employed’, and they would need to register themselves officially as a ‘sole trader’.
This is a common misconception, because you’re actually able to employ people and remain as a sole trader. Just because a sole trader is deemed to solely manage the business on their own, that doesn’t mean that they have to work alone in order to maintain your status.
This is also why, for some sole traders, having an employer’s liability insurance policy is a legal requirement. It’s also important that sole traders follow employer rules and register as an employer with HMRC.
You can find out more on this topic from reading our blog: Can a Sole Trader Have Employees?
Yes, sole traders are legally required to pay National Insurance, as long as they are over the age of 16 years old and make over a certain amount of profits. How much sole traders owe in National Insurance is based on how much profit their business makes.
There are two NICs (National Insurance Contributions) classes that sole traders need to be aware of:
- Class 2: weekly rate of £3.45 throughout if sole trader earns more than £11,908 in profit in the 2023/24 tax year.
- Class 4: a percentage of sole trader profits are paid if sole trader earns more than £12,570 in profit in the 2023/24 tax year.
Take a look at our blog on National Insurance and learn more about what contributions self-employed works and sole traders are required to make.
Do sole traders need Employers' Liability Insurance?
Whether you need employers' liability insurance cover or not depends on, ultimately, whether you have employees or not. If you work by yourself or only employ close family members, you're not required to have employers' liability cover. On the other hand though, if your business does employ people, then yes, you are required to get an employers' liability policy.
If you're still unsure of how employers' liability insurance works and whether you need this additional cover, you can always contact a member of our team who would be more than happy to offer their professional advice so you can get the clarity you need.
Public liability insurance cover is perhaps the most important insurance for sole traders. Although it's not required by law to have public liability insurance, for many sole traders, they prefer to have this cover in place so that they can counter the many risks that come with conducting their business activities.
Any work that sole traders do, whether it's on their own business premises or out on the road, could unfortunately and unexpectedly impact anyone, including clients or the public.
What if the work your business does leads to someone being accidentally injured, or causes property damage? Legal action and compensation pay outs could follow, which could also prove to be financially harmful for your business.
Fortunately, that's where public liability cover can help, minimising the impact of claims made against you and your business when something goes wrong. That's why, of all the types of sole trader cover, we'd recommend most that you get a public liability insurance policy in place to protect your business.
Whether you need professional indemnity insurance or not depends on the services your business provides. Many sole traders opt to get this cover to protect themselves against breaches of their contract or in the event that the client sees issue with the work the business has done or the professional advice they received.
Imagine, for example, your business was to offer advice to a client which causes them to make a lose out on a lot of money. The client might then feel they have a right to sue, and that would force your business to fork out on legal costs and, potentially, compensation claims.
Things like this can happen in business, and that's why sole traders rely on professional indemnity insurance cover, to help them navigate the possibilities of loss-causing advice and negligence.
Many entrepreneurs typically start their business journeys as sole traders before eventually transitioning to become owners of limited companies.
Switching from being a sole trader to owning a limited company is a simple process. Just follow the standard procedures for setting up a limited company, and be sure to notify the following parties:
- HMRC: Inform HMRC to deregister as self-employed and update them about the change in your business structure.
- Your accountant: Let your accountant know about the shift to a limited company so they can adjust tax calculations accordingly.
- Your insurance provider: If you're moving from a limited company to being a sole trader, review your insurance policy to ensure it's suitable for your new business setup.
The primary distinction between limited companies and sole traders lies in their ownership structure. Sole trader businesses are owned by a single individual, whereas limited companies can have multiple owners.
In contrast to sole traders, the owners of a limited company usually do not have their personal assets entangled with the business. They are shielded from business liabilities, as the company is regarded as a distinct legal entity separate from its owners. Conversely, sole traders bear full responsibility for the operation, with their personal assets intertwined with the business, making them legally indistinguishable from the company itself.
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