Insurance for Contractors
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.
- What is Professional Indemnity Insurance?
- What is Employers Liability Insurance?
- What is Public Liability Insurance?
- What is jury service insurance?
- PI Insurance Checklist for IT Contractors
- PI Insurance Pitfalls Ten Tips to Avoid a Claim
- Q & A - Professional Indemnity Insurance
- Professions That Require PI Insurance
- Contractor Professional Indemnity Insurance
- Life Insurance
Which policies should I consider?
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).
Is insurance required by law?
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.
So why should I buy them?
There are a number of reasons and benefits to having business insurance in place:
- The majority of recruitment agencies and end clients demand that you hold insurance as part of your contract.
- Although the likelihood of claims will be undoubtedly slim, it is still a good idea to have insurance for peace of mind.
- If you are operating outside IR35, purchasing insurance is a key indicator of being in business on your own account.
What level of cover do I need?
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.
How much does insurance cost?
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.
Where should I get them from?
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). Simply visit the Contractor Insurance shop to purchase any of the products listed within this guide.