Contractors’ Insurance Guide
Professional Indemnity Insurance
Personal insurance for contractors works exactly the same as all your other necessary insurance such as your car or home insurance.
Contractors, as part of their daily work, provide professional advice that is relied upon by their clients and its suppliers. This means that if mistakes are made or you are deemed to have been professionally negligent, you have a direct financial responsibility to your client for the errors and may be liable for compensation.
This could cost the contractor hundreds of thousands of pounds if things go wrong so it’s vital that you have the right insurance in place before any contract begins.
Many clients now insist on evidence of contractors having professional indemnity insurance; having this protection proves to your clients that you are professional and responsible in your approach and it should help you in securing future work.
For contractors, professional indemnity insurance covers you in the unlikely event that you have made a mistake, or are deemed to have been negligent, in carrying out your business. It is used by most of the professions in the UK that offer advice to clients.
A wide range of insurance policies, from an even wider range of providers, are available to protect contractors in the event of an accident at work, or claims against them for negligence which will provide you with complete cover and peace of mind.
The policy will also cover the cost of fixing any mistake on your part, therefore avoiding a larger claim being made.
The amount of cover you need depends very much on your business and the types of clients you will be working for. For example, government departments typically require contractors to have a minimum of £5 million professional indemnity cover.
Public & Employers Liability Insurance
As a contractor, you may also need public and employer’s liability cover.
Public liability insurance will cover you if someone is accidentally injured by you or your business operation and will include cover in the event that a third party makes a claim for compensation against you. It’s also worth noting for contractors that if you have employees you will also need employer’s liability cover.
For umbrella contractors, Parasol include comprehensive Professional Indemnity cover, along with public and employer’s liability insurance, as part of your employment terms to the value of £25 million.