In the modern business climate, the attention to safety and precaution is high, and with lines of work that come with ‘professional risk’, the need for protection is great. Insurance is a commodity that is necessary in all sectors of trade, and this is adamant for those who are self-employed, and to any professional concerned with taking care of business, correct insurance is crucial.
Contractors are those who work via their own limited companies and because of this are arguably more vulnerable than any other working professional. Although a contractor is hired out by larger firms, as they work for their own limited company, they are not employees of the firm they may be doing work for. It is because of this that contractors are so exposed to potential loss as they are not protected by any company insurance umbrella or contractual protection provided by an employing corporation. Basically, contractors are their own boss, shareholder and owner, therefore if ever anything that could result in financial loss should occur; they would be totally liable, therefore at considerable risk.
Contractor insurance is vital for any contractor, and thankfully for them, specific insurance policies have been designed with contractors in mind. Contractor insurance ranges from a number of different policies covering a vast number of scenarios, and although many are industry specific, some apply to all contractors and should never be overlooked.
Professional Indemnity Insurance is known to be the benchmark in effective and necessary contractor insurance. Not only is the policy by far the most popular form of contractor protection, but it is also regarded the essential insurance for UK contractors. The policy benefits the holder on a number of different levels, the insurance covering the policyholder in respect of claims made against them by third parties following a professional error or omission in the services or advice they have provided. The policy covers both defence costs, and any liability found owing in the event of a claim.
The policy not only benefits the contractor regarding their professional liability, but can also act as a tool in which to bolster a contractor’s IR35 status within the HMRC IR35 rules. This is vastly important to any self-employed professional and is yet another advantage of carrying the PI Insurance policy.