Freelancers fight the floods

Christmas won’t be so happy for many freelancers this year, with flooding up and down the country continuing to claim victims. Media coverage of flooding understandably tends to concentrate on families and households, but for self-employed workers, working from home or out of an office, these natural disasters can be doubly disastrous.

New data from the Association of British Insurers suggests that as many as four in five businesses that have to cease trading for a period will subsequently fail altogether within 18 months. It’s not difficult to understand why – the cost of replacing damaged equipment and, in some cases, lost stock mounts up very quickly. So too does the cost of lost business when a freelancer is unable to trade for a period. Sometimes, it’s just impossible to recover.

Freelancers’ best hope of avoiding such a calamity is to make sure they have the right insurance in place, says Aidan Kerr, Head of Property at the Association of British Insurers.

“As the UK experiences heavy rainfall, insurers will be geared up to help customers affected by flooding as quickly as possible,” Mr Kerr promises. “Flooding can be traumatic and disruptive, but unexpected events like this are exactly what insurance is for.”

However, it’s important that freelancers recognise home insurance may not be enough to cover their businesses. Whether they work from home or out of an office, freelancers will need to check exactly what their policies cover – and that they have notified insurers that they need business cover.

Start with buildings insurance, which covers the cost of repairs if the building in which a business is based is damaged. Next, look at contents insurance, which covers damage to business equipment and to any stock kept on the premises. Stock should be insured for its replacement cost (rather than its sale price), but should allow for times when there is extra stock in the building – at Christmas, for example.

Business interruption insurance, often sold as an additional extra alongside a buildings or contents policy, is also crucial. These first two insurance contracts won’t pay any compensation for loss of business due to flooding (or any other problem that prevents a freelancer trading for a period) without this additional type of cover.

Finally, freelancers who don’t own the buildings in which they work should check that the landlord has suitable cover in place.

By David Prosser, Editor of Freelancing Matters magazine