The majority of limited company contractors will hold some form of indemnity or liability insurance. These will differ depending on the type of work you are doing and the specific client you are working for.
Insurance question? Submit your queries to Contractor Doctor.
We have put the following FAQ guide together, which should be of assistance when considering which policies you should purchase.
The three most common insurances held by freelancers and contractors are Professional Indemnity Insurance, Public Liability and Employers Liability. Broadly speaking, these cover you against negligence in various circumstances.
You may also wish to consider policies such as Business Interruption, Jury Service Cover, Income Protection and Office Contents (if you have a business premises).
Generally the only insurance required by law is Employers Liability. However, there is a specific exclusion to this rule if you are the only director/employee of your company. If there is more than one worker in your business (i.e. if you employ your spouse), you will probably be legally required to carry Employers Liability insurance.
There are a number of reasons and benefits to having business insurance in place:
This will depend on your contract and nature of business. However, most contractors hold Professional Indemnity Insurance at £1m, Public Liability at £1m and Employers Liability at £10m. Your agency will generally stipulate the minimum levels required contractually.
The premiums for business insurance have reduced over the years with numerous insurers competing. Obviously the exact prices will depend on what you do, your turnover and the level of cover you select. However, if you are a fairly standard IT contractor with turnover of less than £150k you should be able to purchase all three key policies for less than £300 combined.
Many brokers and insurers accept monthly payments for these policies and it is classed as a business expense for tax purposes.
A quick internet search will through up countless providers and it’s fairly easy to compare prices. Our friends at Qdos Contractor offer particularly competitive policies, with a package for IT contractors comprising of Professional Indemnity Insurance (£1m), Public Liability (£1m) and Employers Liability (£10m) all for under £236 per year. Simply visit the Contractor Insurance shop to purchase any of the products listed within this guide.