There are a number of insurance policies on the market for contractors, but none of them are legally required with the single exception of Employers Liability (and only in the event of there being one or more employees in the company other than yourself, including your spouse doing the books).
Policies such as Professional Indemnity Insurance make good business sense, they protect your business from expensive claims from a client who alleges that you made a mistake, and it can bolster your IR35 status, indicating that you take a financial risk.
Both Professional Indemnity and Public Liability Insurance (which covers for death/injury to a third party or damage to third party property), are commonly specified in contracts, standardised agency contracts in particular, as a stipulation for undertaking such agreement. Despite Public Liability also providing benefits mentioned for Professional Indemnity, it is more commonly questioned by those who work in office tasks as to its relevance to them.
Those working in manual labour jobs will see it as an obvious requirement to their business. Public Liability is one of the most common insurance policies taken out by sole traders operating without an intermediary, as those freelancing as fitness instructors, teachers or journalists for example, who might have more contact with the public, have an increased risk of a claim. These types of trades are more likely to take the sole trader route than open a company.
Office workers will generally see Public Liability Insurance as a pointless policy. They usually work at a computer in an office with very little risk of harm to themselves, let alone to somebody else. I’ll first draw attention to the fact that it covers for “damage to third party property”. You may be thinking, what am I going to break while I’m sitting in my chair? Anything can happen really, you could have a fit of rage whilst cursed by slow internet and throw the computer out of the window: that’s a broken computer, window and probably reputation. Far-fetched perhaps, even though we’ve all thought about doing it, but what if you were trying to remove a jam in the printer and ended up breaking it for example?
So what about “death/injury to a third party”? Well you’re not going to be fire breathing in the office I hope, so injuries should be minimal. But what if that computer landed on somebody outside? Or what if you roll your chair over someone’s fragile toe and it breaks? Or if you’re carrying a fresh cuppa across the office, trip on a wire and throw it directly into the head honcho’s face? You might cause some aggression if nothing else.
A permanent employee is for the most part protected by their employer’s insurance policies. They break equipment, their employer is insured for it and they don’t have to pay. Contractors are not covered by these policies, and so clients want to be sure that their staff and property are going to be protected from any mishaps. They don’t want you to break something or injure a member of their staff and not have the resources to compensate for it, and for that reason more than the possibility of you throwing a computer out of the window, is why you need Public Liability Insurance.
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