The majority of limited company contractors will hold some form of contractor insurance, professional indemnity or liability insurance. These will differ depending on the type of work you are doing and the specific client you are working for.
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We have put the following FAQ guide together, which should be of assistance when considering which policies you should purchase.
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The three most common contractor insurance 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 business 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, but you should always assess your business risk.
The premiums for contractor insurance have reduced over the years with numerous insurers competing. 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 chosen partner, Qdos Contractor offer particularly competitive premiums, and most of their business insurances also include a FREE IR35 Contract Assessment. For IT contractors needing Professional Indemnity Insurance (£1m), Public Liability (£1m) and Employers Liability (£10m) is only £272 per year at time of writing (last updated 20/09/2017). Simply visit the Contractor Insurance shop to purchase any of the products listed within this guide.
Contractor Insurance is also available for tradesmen from our partner Rhino Trade Insurance.
We have negotiated an exclusive 10% discount off Professional Indemnity and Public Liability Insurance policies with leading contractor insurance providers, Qdos Contractor, for Contractor Weekly readers. Fill in the form below to access your discount.