A sole trader is someone who is self- employed operating their own business which they own. If you are a sole-trader it is important that you protect yourself from the risks associated with being self-employed.

Good insurance cover is vital for every small trader as the legal structure of a sole trader business means that your business liabilities or debts are your personal liabilities and debts and your personal assets may be used to cover them if things go wrong with your business.

It is, therefore, really important that you protect yourself against any risks to your business.

Having appropriate insurance for your business in place may also be a requirement of your clients or a contractual obligation for you to carry out your business.

Business insurance for sole traders

Table of Content

Types of Sole Traders Who Require Insurance

Anyone who is a sole trader, who owns and operates their own business is strongly advised to have various types of insurance cover in place to protect themselves.

  • Freelancers such as copywriters, designers, engineers, surveyors, accountants, financial advisers.
  • Self employed tradespeople such as electricians, carpenters, plumbers, hairdressers, building contractors.
  • Gig economy workers such as taxi drivers, delivery drivers, carers.
Types of sole traders who require insurance

Are sole traders required to have insurance?

There is no legal requirement to have insurance, apart from motor insurance, in Ireland.  

However, in order to protect yourself financially from things that could go wrong with your business, it is important to consider a number of types of insurance, depending on the nature and size of your business.

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What are common business insurances for sole traders?

Sole traders face unique risks, depending on their individual businesses.  

Every business faces different risks depending on their size and the nature of the business.  

Therefore, there are a number of types of personal and business insurance that you should consider as a sole trader.

Types of insurance for sole traders

Income Protection

What would happen to your income if you were ill or had an accident and couldn’t work?

Income protection for the self employedcan replace a proportion of your income should you be unable to work due to an illness or accident. It is a very valuable protection for anyone who is self employed as their business likely cannot operate unless they themselves can work.

Who offers income protection insurance in Ireland

Life Insurance & Keyperson Insurance

Life insurance pays a lump sum should you die either during the term of the policy for a term life insurance policy or whenever you die for a whole of life policy. Life insurance is strongly recommended if you have family or dependents who rely on your earnings.

Keyperson insurance is a form of business life insurance where the contribution of an employee is considered essential to the operation of the business. Keyperson insurance will pay a lump sum to allow the business to continue operating should the key employee die.

Although, as a sole trader, your business may cease were you to pass away, if you have employees on whom you depend for the success of your business, then it may be worth considering key person insurance for them.

Life Insurance pays a lump sum to your dependents following your death

Commercial Motor Insurance or Van Insurance

Commercial motor insurance or van insurance will cover your car, van, jeep, or truck, should you be at fault in an accident while driving a commercial vehicle or a vehicle for business purposes.

It is important that your motor insurance covers you for driving for business purposes, whatever vehicle you drive as your personal car or van insurance will only cover you for social, domestic or pleasure purposes, not for driving in the operation of your business.

Motor insurance is a legal requirement in Ireland so it is essential to have appropriate cover.

Commercial motor fleet will offer insurance cover if your business has more that three commercial vehicles, be they cars, vans, trucks, buses, or jeeps.

It may be more affordable than insuring vehicles individually, depending on the needs of you business.

Van insurance is financial protection for you and your van

Professional Indemnity Insurance

Professional indemnity insurance is a key insurance for many sole traders. Anyone who offers advice or services in a professional capacity should consider professional indemnity insurance.

Professional indemnity insurance, also known as professional liability insurance or professional negligence insurance, offers financial protection should your professional advice or service result in a financial loss for your client due to a mistake, error, or omission.

Professional indemnity insurance is also important where you may handle personal client data subject to GDPR requirements.

Professional indemnity insurance should also cover the cost of your legal defence where a claim is made against you.

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Public Liability Insurance

Public liability insurance offers protection where the operation of your business may cause an injury to a third party or their property.

Public liability insurance should cover any award for compensation made to the injured party as well as the legal expenses in defending you.

If the public come to your premises, if you plan or organise events, if you operate your business or job in any of the following, then you will  need public liability insurance:

  • Public space,
  • Deal with other professionals,
  • Tradespeople,
  • Businesses
  • Clients
  • Customers
  • Members of the public

It is especially important for sole traders as your business liabilities are your personal liabilities and your personal finances will be affected if your business is found to be liable for the loss of a third party.

Public liability insurance is financial protection for your business

Product Liability

As a sole trader, if you sell, distribute, manufacture, alter, service, install or repair any physical product then you will need product liability insurance.

Product liability insurance offers protection from claims for injury or damage to another person or their property due to a fault in the product made or supplied by your business.

Product liability will typically cover awards for compensation to the injured party, as well as your legal costs in defending yourself.

product liability insurance policy

Employer’s Liability Cover

If you have employees as a sole trader, you may need employers liability cover.

Employer’s liability insurance is protection specifically for employees of the company or business should they be be injured or suffer a loss and it is found to be the employers liability ie. the fault of the employer.

Employers liability cover

Commercial Property Insurance

If your business operates from a premises, even if you do not own that premises,you are advised to take out commercial property insurance.

Commercial property insurance for commercial landlords will cover their building from damage due to:

  • Fire,
  • Storm
  • Floods
  • Escape or water or oil
  • Theft
  • Malicious or accidental damage

There will also be an element of public liability cover for injury or property damage to a third party arising from use of the commercial premises.

Commercial property for commercial tenants will consist of cover for their:

  • Contents
  • Fixtures and fittings
  • Stock,
  • Machinery
  • Tools and business equipment
  • due to loss as a result of the insurable risks above.

Commercial property cover may also include money cover for storing and transporting cash.

If you operate your business from home, you may feel that you don’t need commercial property insurance, and that your home insurance is sufficient.

Home insurance may not cover you for running your business from home, and personal home insurance would typically not offer enough protection for the equipment and/ or tools you would require as a sole trader.

The third party liability cover included in your home insurance would also probably not cover use of your home as a business premises.

Commercial property insurance is an important business insurance for any business that owns their own property

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Learn more about business insurance for sole traders.

In business, things can and do go wrong and if you are a sole trader, the buck stops with you. That is why it is really important to protect yourself and your business with the right types of insurance for your business.

Every business is different and faces unique risks and challenges, so it’s really important to weigh up the risks associated with your business and get the appropriate cover for you.

Take our free online assessment to speak with a Qualified Financial Advisor who can offer you the best advice and support for your business.

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