If you’re starting your own limited company as a contractor, you may have been told that you need to have insurance. Often, Recruitment Agencies will tell that you have at least a minimum of Professional Indemnity insurance in place and it’s important that you don’t ignore this.
Not having the correct insurance in place as a business owner can spell disaster for your business and could also impact you personally.
The risks of not having contractor insurance
Working as a contractor has many advantages – you work for who you want to work for and when you want to work, but as a business owner providing services for others, you are exposed to greater risks than the “normal” worker.
There’s quite a few questions you need to ask yourself if you are a contractor – here’s a few that spring to mind:
- Do I give professional advice?
- Does my Limited Company employ anyone?
- Do I visit my client’s premises?
- Could someone take action against me that would cost me to defend?
If you answer yes to any of the above questions, and most contractors would probably answer yes to all of them, then you MUST ensure that you have the right package of insurance in place to cover any of these eventualities.
Contractors Insurance: the three essential policies
There are many kinds of insurance available and many organisations that can provide them, however it’s important to ensure that you have at least the following three kinds of cover in place as a bare minimum.
- Professional Indemnity
- Public liability
- Employer’s liability
This covers you for the financial consequences of professional negligence. Everyone makes mistakes and if a client alleges that you have made a mistake or you know you have made an error while working, this cover will ensure that your defence costs and the costs of any damages awarded to your client will be covered.
If you cause injury to a person or damage to property while providing service via your limited company then this kind of policy will ensure that your legal costs and any damages are covered.
Even if you don’t have any employees, employer’s liability insurance is still a requirement and it normally insisted on by clients and recruitment agencies.
Recommended insurances for limited company
In addition to the compulsory cover shown above, there are other policies available that can provide company directors with peace of mind and can protect themselves (and their families) should the unthinkable happen.
- Director’s and officers’ liability
- Personal accident cover
Director’s and officers’ liability
As a company director you can be held personally liable if someone takes action against you if they don’t think you are playing by the rules. This policy will cover your legal costs and protect your assets.
Personal accident cover
This is one of the most popular add ons to limited company insurance. If you have an occupational accident and can’t work then you are likely to face a major loss in income which will affect you and your family.
Personal accident cover pays a weekly benefit while you recover and will also provide a lump sum should you die.
What can One Click do
We can advise you on your business options and can put you in touch with our preferred partner, Kingsbridge Contractor Insurance. By visiting the Kingsbridge page on our website, you can access preferential rates and get a live quote before applying.
Along with over 13 years experience in the contractor payroll industry, and after spending most of his working life as a financial advisor in the regulated financial services industry, Mike has garnered an extensive network of contacts in the recruitment industry, many of whom trust both him and the One Click Group to handle their accounting. Mike has also been a member of various industry bodies throughout the years, such as the British Institute of Recruiters, in order to champion best practices across the contractor payroll industry.