As a Contractor you should definitely consider taking out an Insurance policy from the beginning of your business. As a general rule you should determine the scope and extent of each project to ensure that you are covered for every eventuality especially if risks may be encountered. Contractors should examine the wide array of Contractor Insurance that exists before making a final decision.
Insurance for Contractors that work through a Limited Company
Contractors that run their business through a Limited Company must take out that you have Professional Indemnity Insurance and Public Liability Insurance. If you hire more than one employee in your business than Employers Liability Insurance must be taken out as required by law. These 3 types of Insurance policies are normally a prerequisite that contractor agents and clients would request before giving you a project.
Types and Levels of Contractor Insurance
Types of Insurance
There are many insurance providers in the market place and their packages are different form one another. It is advisable to compare many Insurance firms to determine what type and level of insurance you should take out.
Professional Indemnity Insurance
This type of insurance protects you if claims are made against you and includes any damages that may become payable as a result of your advice or service. This can normally be taken out as a stand-alone policy.
Public Liability Insurance
This type of Insurance will protect you if a client or member of the public is injured or their property is damaged due to your business. It will cover you for any damages brought against you.
Employers Liability Insurance
This type of Insurance will protect you if any of your employees are injured or become ill whilst working for you. It covers you for any claims against you or your business.
Cyber and data risk Insurance
This type of Insurance will protect you if your business suffers or is disrupted due to data breach or hacker attacks. If this affects IT systems and results in theft of personal data or commercially sensitive data or extortion by hackers, then you and your business will be protected and supported by a legal team.
Personal Accident Insurance
A Personal Accident Insurance policy would permit a claim by you if you were unable to work and would be paid out as a lump sum of money.
Contractor IR35 Insurance/Tax Liability Insurance
When dealing with HMRC IR35 enquiry it is advised that you take out this type of Insurance policy. It will protect you if you face a heavy tax bill and your case will be dealt with by specialists who can contest your case.
Income Protection Insurance
If you suffer an illness or injury this type of Insurance covers sick pay. Policies can be taken out based on a contract rate and can protect up to 70% of your income and it pays out a monthly income.
Critical Illness Insurance
In conjunction with Income Protection you will be payed a monthly income if you fall ill. If you are suffering a serious illness, then a claim would pay you out a lump sum.
Jury Service Insurance
A relatively cheap Insurance policy which gives you peace of mind if you are called up for jury service whilst working on a project.
Office Contents Insurance
All office based equipment is protected in the event of damage, loss or if they are stolen.
Levels of Cover
As a rule, a contractor should take out Insurance Policies for Professional Indemnity at £1m, Public Indemnity at £5m and Employers Liability at £10m. These levels of Insurance are normally required by an agency or client before signing a contract for a project.