Despite the many advantages and obvious benefits of Professional Indemnity Insurance (PI Insurance) some contractors are still waiting months before purchasing the policy after setting up a limited company.
PI Insurance is an example of very good, quality and cheap contractor insurance, and its effects can be felt instantly from its cover. The policy itself protects a contractor should they make a mistake that leads to financial loss to another party. The reason that this would be costly to a contractor is because in these cases the party will no doubt file a negligence claim against the contractor that could then be very costly. This is where PI Insurance would be effective as its vital protection would cover a contractor for all costs and fees in this case.
Many contractors are still waiting a while before purchasing this insurance however, but we advise that this could have adverse effects. PI Insurance is highly necessary as soon as a contractor begins a contract, and with potential negligence claims of possibly millions of pound on the line, the small annual fee is no high cost.
Because of this we advise contractors to purchase the product, as by owning such a valuable cover you will gain complete peace of mind in these cases. As well as this, having PI Insurance will bolster the perception that you are in business on your own account, therefore aiding your IR35 position. Plus it will give your clients the reassurance that there are sufficient resources to handle any recourse in the unlikely event of an alleged breach of duty, adding value to any tender.