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The more clients you work with, the greater the risk of something going wrong. Contractors' insurance means you can keep on your toes without looking over your shoulder.
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Covers the costs of fixing your mistakes, and defends you against allegations you’ve not done your job properly. A must-have for business with paying clients.
Contractors come in many shapes and sizes, from IT experts to marketing gurus. But whatever industry you work in, the job comes with risks.
That’s because, as with any business, things don’t always go to plan. And if you somehow cause an accident, or your temporary boss questions the quality of your work, you’ll need something to fall back on.
That’s where contractor insurance comes in. It pays your legal and compensation costs if someone sues you and helps cushion the blow if a contract turns sour.
Not forgetting that some employers will want upfront proof you’re insured before hiring you. And it’ll boost your standing as a legitimate stand-alone business.
Win-win, then.
We’d say all contractors stand to benefit from the legal know-how and financial help provided by contractors’ insurance. Regardless of how many clients you have, how long your contracts are, or what industry you work in.
It’s the protection you need to cover your individual risks. And while your client might have their own insurance requirements, it’s up to you to decide what cover you need.
Don’t forget, how you work matters too. If your business is set up as a limited company, you’ll be in charge of buying and maintaining your own contractors’ insurance.
If you work through an agency, however, and are employed by an umbrella company, then chances are you’re already covered. Nothing’s worth the risk of being uninsured, though, so don’t assume. Check the terms of your contract or ask your agent if you’re unsure.
As far as contractors’ insurance requirements go, legally, you only need employers’ liability insurance (EL). It covers your staff (assuming you have some) if they get sick or injured at work and claim against you for it.
You should also consider the two types of contractors’ insurance clients ask for most often: professional indemnity (PI) and public liability (PL) insurance. PI protects you from negligence claims, while PL covers accidental third-party injuries and property damage at work.
Working as a contractor can mean travelling to your client’s premises with all your kit in tow. Lost, damaged, or stolen gear isn’t just inconvenient – it could scupper a deadline. Portable equipment insurance pays for any repairs or replacements and keeps you working, while equipment breakdown insurance covers those pesky incidents when your tech suddenly malfunctions.
Cyber insurance is essential if you use email, have a website, or store your clients’ data electronically. It pays to re-boot your systems if there’s a cyber-attack and covers your lost earnings. It also provides you with the legal and PR advice you need if you’re sued for data loss.
On top of all that, cyber insurance also gives you the option to add on cover for financial cybercrime (including social engineering) and lost earnings. A must when a small mistake by a team member can lead to a big bill. And if, like many small businesses, your cyber security budget is tight.
Last but not least, legal expenses (LE) insurance offers a helping hand when you’re tied up in a legal dispute. Client refusing to pay your invoice? In line for a tax investigation by HMRC? LE removes the sting of taking time out of your business by sorting out your legal aid.
You might be the backup, the spare pair of hands, the extra workforce…but that doesn’t absolve you of risk. What’s more, the rules around insurance requirements for subcontractors can be confusing. Much depends on what kind of subcontracting you do.
As a rough guide:
Labour-only subcontractors are usually covered by their client’s insurance. Because they use their client’s tools and are closely supervised, they’re treated much like employees.
Bona fide subcontractors, on the other hand, are more independent. They’re free to bring their own tools and work their own hours. They’re also responsible for their own insurance. Whether that’s public liability for slip-ups and accidents, or employers’ liability to cover their workers.
Mistakes happen. But if you muck up, give bad advice, or there’s a misunderstanding your client says has cost them money, they can claim against you for their loss.
Allegations like these – whether justified or not – take time, money, and legal expertise to sort out. And if, like most people, you’re short on any of them (or maybe all three), professional indemnity insurance for contractors throws you a lifeline.
It pays for a legal expert to fight your corner, picks up court costs, and covers any compensation you might owe too. Job done.
When you’re out and about working, the chances are you’ll come into contact with others. And because you’re a contractor rather than an employee, it makes you liable if there’s an accident, and it’s your fault that someone gets hurt, or something’s damaged.
Imagine a client trips over your electrical lead and has to be off work for weeks to recover. Or you accidentally spill a drink over their laptop at a progress meeting. They’ll want compensation, and you’ll have to pay.
Contractors’ public liability insurance protects your bank balance. It pays your legal costs and any compensation due. Sorted.
Every contractor is different and so it’s hard to say. It all depends on what cover you buy and how much.
Some things that can influence the cost of contractor insurance are what you do, who you do it for, your highest-value contracts, and whether you hire any extra help. It all makes a difference to how much risk you face.
When it comes to how much professional indemnity insurance you need, you should have enough to cover your worst-case scenario. If a project doesn’t pan out the way it should, what’s the most your client could sue you for?
Our advice is to always buy as much cover as you can afford. At the very least, it should be enough to fix your error and pay for any compensation and legal bills (both yours and your client’s, potentially).
To find out how much contractors’ insurance could cost, just start an online quote. You’ll get all the info you need in just a few clicks.
We specialise in business insurance. And we know that you don’t always have time on your side.
That’s why we’ve made buying a policy quick and easy. So you can get the cover you need in just a few clicks.
We also know that you’re probably going to have questions. Insurance can be confusing, and sometimes you just need someone on the other end of the phone who knows what they’re talking about.
Every one of our advisers can provide expert advice and guidance. The best part? They keep it simple. In language you can understand.
That’s why our customer service is rated Platinum by the independent reviews platform Feefo.
Oh, and we’ll even pay you if you refer someone to us and they buy a policy.
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