Contractor Insurances

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Insurances
Why do I need insurance cover?
Attitudes to insurance vary. Some believe it to be a 'necessary evil' whilst others have a strong belief in the protection of their business, which insurance affords. An insurance policy is a legal contract which must be expressed in relatively complex legal terms. It is a promise to provide compensation for something which may never happen. Any contractor, without adequate insurance, risks the success of his business.

Types of insurance available
There are various types of business insurance available, the most common types to contractors are:
• Employers Liability
• Public Liability
• Professional Indemnity
Employers Liability Insurance
Most employers are required by the law to insure against liability for injury or disease to their employees arising out of their employment. Employers Liability Insurance covers your business if an employee is injured or falls ill at work. Employers' Liability Insurance will meet the cost of compensation for injuries sustained to your employees (or illnesses), whether caused on or off site.

By law, an employer must have and be insured for at least £5 million. Most insurers automatically provide cover of at least £10 million. When you take out a policy you will receive a certificate of employers' liability compulsory insurance. You must display a copy of this where employees can easily read it and keep copies for at least 40 years or risk a fine. You need to make these certificates available to health and safety inspectors on request.
Public Liability Insurance
Public liability insurance covers claims made against your business, if its owners, directors or employees are shown to be responsible for personal injuries to a third party or damage to property.

Public liability insurance is a core cover of many types of insurance; indeed you are usually unable to buy employers liability cover without it. Public liability covers the Business to a certain limit of indemnity. This is usually £1m, £2m or £5m and occasionally £10m

• Example:
Whilst at a customer's site, you accidentally knock over a cup of coffee, and the contents pour down the back of a computer, damaging it beyond repair. Public liability insurance would cover any claim from the customer.
Professional Indemnity Insurance
This protects your business against compensation sought by a client if you have made mistakes or are found to have been negligent in some or all of the services that you provide for them. Professional indemnity insurance will also cover any legal costs.

Without Professional Indemnity Insurance companies would expose themselves and run the risk of being sued for all sorts of claims. One important aspect to bear in mind when considering professional indemnity insurance is that you need to be covered both at the time of the event and when the claim is made. This is because there can often be a long delay between an event and a subsequent claim.

• Example:
A negligent act, or error made during the course of your duties
So, in summary...
...whether you are setting up your own limited company or using the services of an umbrella company always ensure that you have adequate cover for the nature of your business

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