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Running your own business gives you freedom, flexibility and the satisfaction of building something for yourself. It also means that when things go wrong, there's nobody else to absorb the impact. A claim, an injury or an HMRC investigation lands squarely on you.
This guide covers everything you need to know about sole trader insurance: what it is, what products are available, how much each costs and what happens if you don't have it. By the end, you'll know exactly what cover suits your work, and what you can safely skip.
What is Sole Trader Insurance?
A sole trader is someone who runs their own business as an individual. You're self-employed, you keep the profits, and you're personally responsible for any losses or liabilities the business incurs. In the trades, the majority of self-employed workers operate as sole traders, whether they're plumbers, electricians, decorators, carpenters or anything in between.
Unlike a limited company, there's no legal separation between you and your business. That's what makes insurance particularly important. If someone makes a claim against your work, it's your personal finances on the line, not a company's balance sheet.
What insurance do sole traders need?
There's no single answer, because it depends on the nature of your work. But there are a handful of insurance products that most sole-trading tradespeople will want to consider.
The core products are Public Liability Insurance, Tools Cover, Personal Accident Insurance and Income Protection Insurance. If you employ people, even temporarily, Employers' Liability Insurance is a legal requirement. If your work involves professional advice or design, Professional Indemnity Insurance is worth adding. Legal Expenses Insurance and Tax Enquiry Insurance are useful additions for anyone managing their own books.
We'll go through each one in detail below.
Public Liability Insurance is the most important cover for most sole traders in the trades. If a client, customer or member of the public suffers accidental injury or property damage as a result of your work, this is the cover that protects you. It pays for your legal defence costs and any compensation you're ordered to pay.
Think about the situations you're in every day. You're working in someone's home, a commercial property, or on a building site. There are tools, cables, wet surfaces and materials everywhere. Accidents happen, and when they do, someone has to pay for them.
Without Public Liability Insurance, that someone is you, personally. A single claim for accidental damage to a customer's kitchen or a third-party injury on site could run into tens of thousands of pounds in compensation and legal fees.
If you work completely alone, you don't need Employers' Liability Insurance. But the moment you bring on any workers, the situation changes. This includes full-time and part-time employees, temporary workers, apprentices, and labour-only subcontractors who work under your direction.
Employers' Liability Insurance covers claims made by your workers if they're injured or fall ill because of their work for you. It's a legal requirement for any business with employees, and the fine for not having it can reach £2,500 for every day you operate without cover.
Many sole traders think they don't need this because they use "subbies" rather than directly employing people. But if those workers are under your direction and control on a job, they may well be classed as employees for insurance purposes. If you're not sure, it's worth getting covered. Employers' Liability Insurance from Rhino starts from £5.21 per month.
Professional Indemnity Insurance covers claims that arise from professional advice, designs or services you provide. It's most relevant for tradespeople whose clients rely on their expertise and judgement, not just their labour.
If you design as well as build, specify materials, advise on compliance, or produce drawings and plans as part of your work, a design or advice error could result in a claim against you. Professional Indemnity Insurance covers your legal defence costs and any compensation arising from that kind of claim.
It works on a claims-made basis, which means the policy in force when the claim is made responds, not necessarily the policy in force when the work was done. That's worth knowing if you take on design-and-build contracts regularly. Professional Indemnity Insurance from Rhino starts from £5.00 per month. For more detail, see our Professional Indemnity Insurance guide.
Your tools are your livelihood. Lose them, and you can't work. Tools Cover from Rhino covers theft, malicious damage and accidental damage to your tools while they're in or being transported in your vehicle.
Van break-ins are a regular reality for tradespeople. A set of power tools, a specialist kit or a collection of hand tools built up over years can be expensive to replace at short notice. Tools Cover means you can get back on the job quickly, rather than trying to fund replacements out of your own pocket.
There are a few things to keep in mind. For a theft claim to be valid, your tools need to be hidden from sight in your vehicle, your vehicle must be locked and alarmed, and you'll need to be able to evidence the original value of what was stolen. The excess is £100, and depreciation of 10% per year applies up to a maximum of 50%.
Tools Cover from Rhino starts from £4.74 per month. It doesn't cover electronic equipment such as phones, laptops or sat navs - you'll need Gadget Insurance for that.
Self-employed tradespeople work in physically demanding, high-risk environments. Falls from height, cuts, fractures, strains — the injury rate in the construction and trades sector is significant. And if you're injured and can't work, there's no employer sick pay to cover your outgoings.
Personal Accident Insurance pays a financial benefit if you're injured in an accident. That includes daily hospitalisation benefit, lump sums for serious injuries such as fractures, and larger payouts for permanent disablement or accidental death.
Rhino offers three levels of Personal Accident Insurance, so you can choose the right level for your circumstances. Cover is available to UK residents aged 18 to 65. It covers accidents only, not illness — for illness cover, Income Protection Insurance is the product to look at. Personal Accident Insurance from Rhino starts from £7.42 per month.
Income Protection Insurance is the broader safety net. It pays a monthly benefit, up to 60% of your income, if you're unable to work due to accident or illness. Unlike Personal Accident Insurance, it covers both injury and sickness, making it the more comprehensive of the two for long-term income security.
For a sole trader with no sick pay and no employer support, Income Protection Insurance is what stands between a period off work and serious financial hardship. It pays from after a deferred period you choose at the start, and continues for as long as you're unable to work, up to the limits of your policy.
A 90-day waiting period applies from the policy start date before sickness claims can be made. Pre-existing conditions are excluded. Cover is available to UK residents aged 18 to 65, actively working at least 16 hours a week. Income Protection Insurance from Rhino starts from £5.52 per month.
Legal disputes are a fact of business life. A client who won't pay, a contract disagreement, an employment tribunal claim or a regulatory prosecution can all cost significant money in legal fees, even if you're in the right.
Legal Expenses Insurance covers the cost of pursuing or defending legal cases across ten areas, including employment disputes, contract disagreements, debt recovery, property disputes and criminal prosecution defence. It also provides access to a legal advice helpline, which is useful for getting quick guidance before a dispute escalates.
One important point: the policy excludes disputes that arose in the first 90 days of a new policy, and anything that existed before the policy start date. It's worth putting this cover in place before you need it. Legal Expenses Insurance from Rhino costs £7.08 per month.
Sole traders submit their own tax returns, and HMRC has the right to investigate any return it chooses. An enquiry doesn't have to mean you've done anything wrong. HMRC can open an investigation at random, and responding to one properly requires accountancy time that can run into hundreds of pounds.
Tax Enquiry Insurance covers the professional accountancy and legal fees involved in responding to an HMRC investigation. That includes income tax enquiries, VAT disputes, IR35 investigations and PAYE compliance checks. CIS workers in particular may find this cover useful given the additional scrutiny that comes with construction industry tax arrangements.
Tax Enquiry Insurance from Rhino costs £2.92 per month. A 30-day notification window applies after policy expiry for claims to be valid.
How much does sole trader insurance cost?
Below is a quick breakdown of pricing across Rhino's products, all available to sole traders:
Product | Monthly | Annual |
Public Liability Insurance | from £5.21 | from £62.50 |
Employers' Liability Insurance | from £5.21 | from £62.50 |
Professional Indemnity Insurance | from £5.00 | from £60.00 |
Tool Insurance | from £4.74 | from £56.86 |
Personal Accident Insurance | from £7.42 | from £89.00 |
Income Protection Insurance | from £5.52 | from £66.24 |
Legal Expenses Insurance | £7.08 | £85.00 |
Tax Enquiry Insurance | £2.92 | £35.00 |
The total you pay depends on which products you take out and the level of cover you choose for each. The simplest way to see your exact price is to get a quote online from Rhino. It takes under 60 seconds.
What happens if you don't have sole trader insurance?
Insurance is a financial safety net for you and your business. As a sole trader, that safety net is particularly important because if something goes wrong and you're not covered, you're personally liable for whatever it costs to resolve it.
A claim for accidental injury or property damage arising from your work, if you don't have Public Liability Insurance, becomes your personal financial problem. Legal fees alone can run into thousands. Compensation settlements can run much higher. There's no cap on what you could be asked to pay.
Running a business with workers and no Employers' Liability Insurance isn't just risky, it's illegal. The fine is up to £2,500 per day, and any claim from an injured worker still lands on you personally on top of that.
An injury or serious illness that puts you out of action for weeks or months is hard enough to deal with. Do it without income cover in place and you're also facing that period with no money coming in, no sick pay, no support, and a mortgage, bills and a business that don't stop while you're recovering.
An HMRC enquiry, even one where no error is found and no tax is owed, requires your accountant's time to respond properly. That time costs money. Tax Enquiry Insurance covers it; operating without it means picking up that bill yourself.
How to get sole trader insurance from Rhino
Getting covered is straightforward. Head to the Rhino website, choose the products you need, enter your details and get an instant quote. There's no broker, no phone call required and no paperwork to post. You can be covered the same day, with your documents available online straight away.
If you want to talk through your options first, our team is available to help. But for most sole traders, the online quote process covers everything you need.
Sole Trader Insurance FAQs
For most sole traders in the trades, Public Liability Insurance is the starting point. It covers claims from clients and third parties for accidental injury or property damage. Beyond that, the products you need depend on your situation. If you carry tools, add Tools Cover. If your income would stop if you were injured, consider Personal Accident Insurance or Income Protection Insurance. If you employ anyone, Employers' Liability Insurance is a legal requirement. If your work involves advice or design, Professional Indemnity Insurance is worth adding.
Only Employers' Liability Insurance is legally required, and only if you employ people. Public Liability Insurance and other products are not legally required, but many clients and sites will insist on them as a condition of working with you. Beyond compliance, the right cover protects your personal finances in a way that operating without insurance simply doesn't.
No, it isn't a legal requirement in its own right. But that doesn't mean you can easily work without it. Most commercial clients, main contractors and site operators require proof of Public Liability Insurance before they'll let you start work. Many domestic customers are also starting to ask for it. And without it, any claim is your problem to deal with alone.
Public Liability Insurance from Rhino starts from £5.21 per month. For the protection it provides, it's one of the most straightforward decisions a sole trader can make. You can find out more on our Public Liability Insurance page.
It's not a legal requirement, but for most sole traders working on client premises or in public, it's essential in practice. Most commercial clients require proof of Public Liability Insurance before you can start work. Domestic customers increasingly ask for it too. And if an accident happens and you're not covered, you face legal costs and compensation personally. Public Liability Insurance from Rhino starts from £5.21 a month.
If you work alone with no employees, you don't need it. The moment you take on any workers, including temporary labour, apprentices or labour-only subcontractors who work under your direction, it becomes a legal requirement. Don't assume that using subbies rather than directly employed staff removes the need for this cover. If they're working under your instruction, they may be classed as employees for insurance purposes.
The only legally required insurance for UK sole traders is Employers' Liability Insurance, and only if you employ people. All other insurance products are discretionary. However, many clients, main contractors and site operators will require you to hold Public Liability Insurance as a condition of working with them. Some trade bodies and professional associations also specify minimum cover levels for membership.
Public Liability Insurance starts from £5.21 per month with Rhino. Tools Cover starts from £4.74 per month. Income Protection Insurance starts from £5.52 per month. The total cost depends on which products you take out and the level of cover you choose.
Public Liability Insurance, Employers' Liability Insurance and Tools Cover are not affected by your health. For Personal Accident Insurance and Income Protection Insurance, pre-existing conditions are excluded from cover. This means any claim arising from a condition you had before the policy started won't be covered. Your ability to take out the policy itself isn't restricted, but the exclusion will apply.
The excess varies by product. For Tools Cover, the excess is £100 per claim. For Professional Indemnity Insurance, the excess is £1,000 per occurrence. Your policy schedule will set out the exact excess applicable to each product you hold. Always check this before making a claim.
Rhino's standard policies are annual, and we do not offer cover for single or short-term jobs.
The terms mean the same thing in practice. "Sole trader insurance" and "self-employed insurance" both describe the range of insurance products available to individuals running their own business. The products available, including Public Liability Insurance, Tools Cover and Income Protection, are the same. Rhino's cover is built specifically for tradespeople, so the products and pricing reflect the work you actually do.
