What Insurance do you need as a Contractor?
As an independent contractor you will be providing your services as well as professional advice to clients. In the event that you make mistakes or errors while contracting for a client, they are perfectly within their rights to claim for negligence. For this reason many clients will insist that you have adequate insurance coverage by appropriate professional indemnity insurance before they will hire you.
Some of the more common forms of contractor insurance includes:
Professional Indemnity Insurance (also known as PI Insurance)
Professional Indemnity insurance (PI insurance) protects contractors against claims for negligence, loss of data or documents, unintentional breaches of intellectual property and claims for dishonesty.
As the risks faced by individual contractors will depend on their area of expertise, specialist providers of independent contractors insurance coverage and professional indemnity policies can provide tailor made solutions to suit to the contractor’s particular area of expertise.
If you are working through an Umbrella Company, then this will normally be included in your fee. The amount of cover will vary between Umbrella company providers but you should look for at least £1 million professional indemnity cover.
Our Freestyle Contractor Limited Company service includes £2 million professional indemnity insurance as part of the fixed monthly fee.
Employer’s Liability Insurance
Employer’s liability insurance will cover any ‘employees’ you may have working within your company for any injury sustained at work. It is a legal requirement for employers to have Employer’s liability cover if they have any employees other than themselves or members of their family.
Contracting through a contractor limited company would normally only involve one employee, which would be themselves. .
If you are working for an umbrella company then the provider will have this setup already, normally to the value of about £2 million.
Public Liability Insurance
Public liability insurance protects you against your legal liability where you accidentally cause damage or loss to someone else’s property. This form of contractor insurance also covers you for any accidental injury you cause to someone else whilst working at clients premises. However, as responsiable contractor accountants, would suggest that you confirm this with your agency/client as generally most contractors are covered under the public liability of their client.