Insurance is essential for any business, not just contractors, and will protect not only your business but also your employees if a claim is made against you or the company. This could be considered the most crucial aspect within your business as this covers you if you take a wrong turn.
Professional Indemnity Insurance
This insurance is the most important and is usually compulsory, your contract will usually state this. Each company must have this because, as a contractor or freelancer, you will be providing a service, advice and data to your clients. However, after receiving advice from you, the client may decide to develop the advice into their profession potentially causing a risk to their income as advice is not 100% guaranteed they could lose a significant sum of money. Although this outcome is unlikely, a business has to be covered to protect itself if a client was to take action against them.
This insurance covers the business against the cost of defending claims and damages payable if a client experiences financial loss due to reasoning such as a neglectful act or error. You are able to get cover up to £10 million, however the level of cover you will require will be detailed in your contract.
Liability insurance is provided in two different packages. These are Public Liability Insurance and Employer Liability Insurance.
Public Liability Insurance
If your business frequently works with the public in the environment you work in, then it is advised to take out this insurance. For example, if a client comes to your office for a short meeting and trips over a computer cable then a claim against you could cost you a large sum of money, whereas if you had Public Liability Insurance this would cover the cost of a claim.
This insurance is recommended for contractors and freelancers, as even if you do not have an office you still may work with the public.
Employer Liability Insurance
This insurance will not be applicable to those one man band contractors and freelancers, however if a business has employees, they are required to have this cover by at least £5 million by UK Law. This insurance would cover your business if an employee was to file a claim against your company as a result of an injury/illness caused by working there. If a business has employees or has intentions of hiring any, they should get this insurance immediately after making enquires with various insurance companies.
At Gorilla Accounting, not only do our specialist contractor accountants provide a premium accountancy package using cloud accounting software for just £85 + VAT per month, we can also refer you to our partner, Watson Laurie, to take care of all your insurance needs. If you have need to take out a new insurance policy or like the sound of our specialist contractor service, contact us on 0330 024 0406 to find out more. You can also use our online tax calculator to work out your take home pay after tax.