Sole traders are the backbone of the UK economy, making up a significant portion of the small business landscape. Whether you’re a market trader selling handmade crafts, a food vendor at festivals, or a self-employed consultant, you face unique risks that could jeopardise your livelihood. One of the most critical tools to protect your business is public liability insurance. This article explores why public liability insurance is essential for sole traders, alongside other key types of coverage, and how CMTIA can help ensure you’re covered.
What Is Public Liability Insurance?
Public liability insurance is a type of business insurance designed to protect sole traders, small businesses, and larger enterprises from claims made by third parties for injury or property damage caused by their business activities. It provides financial coverage for legal fees, compensation payouts, and other associated costs, ensuring that businesses can continue operating without the risk of financial ruin in the event of a claim.
For sole traders—especially those who interact with the public, such as market traders, food vendors, or crafters—this could include incidents such as:
- Injury at Your Stall: A customer trips over a cable at your market stall and suffers a broken ankle. They decide to sue you for medical expenses and loss of income.
- Property Damage: While setting up your stall, a heavy display board falls and damages a nearby vendor’s expensive equipment.
- Event Requirements: Many market organisers and councils require proof of public liability insurance before allowing you to trade at their events.
While public liability insurance is not legally required in the UK, it is often a contractual necessity for participating in markets, fairs, or working with certain clients. It also provides peace of mind, knowing that you’re financially protected against unforeseen incidents.
Sole Traders in the UK: A Snapshot
Sole traders are a vital part of the UK’s business ecosystem:
- As of 2024, there are approximately 4.4 million self-employed workers in the UK, with sole traders making up a large proportion of this group.
- Sole traders represent around 56% of all businesses, underscoring their importance to the economy.
- Sole traders typically operate as “one-person businesses,” meaning they manage all aspects of their operations, from sales and marketing to accounting and customer service
- Unlike limited companies, sole traders have unlimited liability, meaning there is no legal distinction between personal and business assets. This exposes them to significant financial risk if their business incurs debts or legal claims
Given these figures, any unexpected expense—such as a legal claim—can have devastating consequences for sole traders.
Do Sole Traders Need Public Liability Insurance?
While public liability insurance is not legally required for sole traders in the UK, it is highly recommended for anyone whose work involves interaction with the public. This type of insurance provides critical financial protection and peace of mind, especially for sole traders who often operate without the safety nets available to larger businesses. Here’s why:
- Financial Protection: Without insurance, you’d need to cover legal fees and compensation payouts yourself. Even minor claims can cost thousands of pounds.
- Client and Event Requirements: Many councils and event organisers require proof of public liability insurance for market traders and stallholders
- Peace of Mind: Knowing you’re protected allows you to focus on running your business without worrying about potential liabilities.
For example, imagine you’re a food vendor at a local festival. If someone claims they got food poisoning from your product, public liability insurance would cover the legal costs and compensation claims.
Therefore, public liability insurance is essential for any sole trader whose work involves interaction with the public. This includes:
- Market Traders: Selling goods at indoor or outdoor markets.
- Food & Drink Vendors: Operating food trucks or stalls at festivals and events.
- Crafters and Artists: Selling handmade items such as jewellery, candles, or artwork.
- One Day Traders: For ad-hoc traders or stallholders who need a one-off policy for a single event only
- Tradespeople: Visiting clients’ homes or workplaces for services like plumbing, electrical work, or carpentry.
- Event Organisers: Hosting events where members of the public are present.
Even if your business operates on a small scale or only trades occasionally, the risks reman the same. Accidents can happen unexpectedly, and having public liability insurance ensures that you’re prepared for any eventuality.
Case Study:
Sarah, a market trader selling handmade pottery, sets up her stall at a busy outdoor market. While arranging her display, she accidentally knocks over a heavy stand, which falls onto a customer’s expensive leather handbag. The bag is scratched and damaged beyond repair. The customer, understandably upset, files a compensation claim for £1,200 to replace the handbag.
For Sarah, who runs her business as a sole trader, this incident is more than just an unfortunate accident—it’s a financial crisis. Without public liability insurance, Sarah would have to pay the compensation out of her own pocket. If the customer decided to escalate the matter to court, Sarah would also face legal fees that could run into thousands of pounds. For a small business owner operating on modest margins, this could lead to severe financial strain or even force her to close her business.
Had Sarah been insured with CMTIA, her public liability policy would have covered the cost of compensating the customer and any legal fees associated with the claim. This would have allowed her to resolve the issue professionally and continue trading without financial disruption.
Market traders face unique risks every day, from accidental damage to third-party property to injuries caused by their stall setup. Public liability insurance isn’t just a safety net—it’s an essential tool for protecting your livelihood.
Other Essential Types of Insurance for Sole Traders
While public liability insurance is vital, it’s not the only type of coverage worth considering. Depending on your business activities, other forms of insurance may be equally important:
1. Product Liability Insurance
What It Covers:
Product liability insurance protects you if a product you sell causes injury or damage to a customer or their property. This is particularly critical for market traders selling physical goods such as food, handmade items, or electrical products.
Who Needs It:
- Market traders selling consumable goods (e.g., food stalls, drink vendors).
- Crafters and artisans selling handmade products like candles, jewellery, cosmetics, or toys.
Example Scenario:
A customer purchases a handmade candle from your stall. Later, the candle overheats and damages their furniture. The customer files a claim against you for the cost of repairs. Even though you didn’t manufacture the raw materials, UK law holds you liable as the seller.
Why It’s Important:
Even if you didn’t directly manufacture the product, you can still be held legally responsible for any harm it causes. Product liability insurance ensures you’re covered for legal fees and compensation claims. CMTIA offers combined public and product liability insurance starting at just £65 per year, making it an affordable option for traders.
2. Employers’ Liability Insurance
What It Covers:
Employers’ liability insurance is legally required if you employ staff or use volunteers to help with your stall. It covers claims made by employees who are injured or fall ill due to their work.
Who Needs It:
- Market traders with employees, apprentices, or volunteers assisting with setup or sales.
- Sole traders hiring temporary staff for events or busy trading periods.
Example Scenario:
You hire an apprentice to help set up your stall at a busy market. During setup, they injure their hand while handling heavy equipment. They file a claim against you for medical expenses and lost wages.
Why It’s Important:
Failure to have employers’ liability insurance can result in fines of up to £2,500 per day in the UK. Even if your “employee” is a casual helper or volunteer, you could still be held liable for workplace injuries. CMTIA allows you to add employers’ liability coverage to your policy when needed.
3. Professional Indemnity Insurance
What It Covers:
Professional indemnity insurance protects against claims arising from errors, omissions, or negligence in professional advice or services provided to clients.
Who Needs It:
- Sole traders offering professional services alongside trading (e.g., custom design services at craft markets).
- Traders providing advice on product use (e.g., skincare products or home décor).
Example Scenario:
You sell handmade skincare products at your stall and advise a customer on how to use them based on their skin type. The customer experiences an adverse reaction and claims your advice caused harm.
Why It’s Important:
Even unintentional mistakes can result in costly claims that damage your reputation and finances. Professional indemnity insurance ensures you’re protected from these risks.
Why Choose CMTIA for Your Insurance Needs?
CMTIA is specifically tailored to meet the needs of market traders and stallholders across the UK. Here’s why CMTIA stands out:
- Affordable Premiums: Policies start from just £65 per year for £5 million in public and product liability coverage
- Comprehensive Options: Choose between different levels of coverage and add employers’ liability if needed.
- No Excess Fees: Unlike many providers, CMTIA policies come with no excess charges.
- Quick Setup: Apply online in just two minutes and receive your documents within 20 minutes.
- Specialised Expertise: CMTIA understands the unique risks faced by market traders and offers tailored solutions.
Whether you’re trading at weekly markets or attending one-off events, CMTIA ensures that you’re fully protected. CMTIA’s Public and products liability insurance starts from only £65 per year*. Apply online to protect your business today.
