What insurance does a contractor need?
Specialist contractor insurance is designed to protect you against the unforeseen – from making a mistake in a piece of work that results in your client losing money, to personal injury claims from third parties and employees. If a claim is made against you (even if it’s unsubstantiated) and you don’t have cover in place, you could be left to pay thousands of pounds in legal fees and compensation payments out of your own pocket. While insurance requirements vary from contractor to contractor, depending on your job and the risks you are exposed to, there are some key types of contractor insurance worth considering.
Professional indemnity insurance
Professional indemnity insurance protects you against allegations of mistakes you make when providing professional services, advice or designs to your client. For example, if a project overruns due to a mistake you made during the planning stages, your client could claim against you for the costs they have incurred due to the delay. Another example could involve you recommending a particular type of software to a client for a certain task and it not delivering the expected improvements. In this case, the client could take legal action against you seeking compensation.
Many clients will require you as a contractor to have professional indemnity insurance in place before you can start work.
Public liability insurance
Public liability insurance protects you against allegations of injuring someone at work or causing damage to third party property. Similar to professional indemnity insurance, most clients will need you to prove you have public liability insurance cover.
If a client trips over your laptop cable, breaks their arm and is subsequently unable to work for several weeks, they could claim against you for their lost income. In this instance public liability insurance could protect you by covering the cost of the claimants lost income so that you don’t have to pay it out of your own pocket.
Public liability insurance can also cover the costs if a claim is made against you for property damage during the course of your business operations. For example, if you accidentally knock a drink over a client’s laptop and it stops working, they could request that you cover the cost of a replacement.
Employers’ liability insurance
If you have one or more employees, holding employers’ liability insurance with at least £5 million of cover is a legal requirement. If an employee suffers an injury or illness as a result of their employment with you, they could make a compensation claim against you. For instance, if an employee slips on a wet surface in the office and breaks their leg, they could make a claim against you for failing to provide a safe working environment. In these situations, employers’ liability insurance can safeguard your business.
Portable equipment insurance
As a contractor, it’s likely that you rely on devices such as a laptop, smartphone and other equipment to carry out your job. Portable equipment insurance can protect your valuable kit against theft or accidental damage anywhere in the world. If while on your way to a client’s premises you accidentally leave your laptop behind on a train and it’s stolen, portable equipment insurance can cover the cost of getting a replacement.
10% discount* for Dolan Accountancy clients
As a Dolan Accountancy client, you can enjoy a 10% discount on contractor insurance from Markel Direct, including professional indemnity, public liability, employers’ liability and more.
