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As a self-employed contractor, it seems like there’s a whole lot to worry about – securing your next contract, getting the job done well, not to mention the day-to-day admin of running a business. But, one thing you shouldn’t have to stress about is the financial impact of unexpected events.
That’s where insurance comes in. From the moment you sign your first contract to the day you retire, holding the right policies can be the difference between bouncing back and breaking down.
We’ve joined forces with the experts at Qdos to learn more about seven of the most important insurance policies for contractors, and why they can be so beneficial.
1. Professional Indemnity Insurance (PI)
What is it?
PI Insurance covers you if a client claims you’ve made a mistake (sometimes referred to as an ‘error or omission’ in the insurance world) in the course of your duties, and they’ve suffered a financial loss as a result. The policy will cover your legal fees in defending yourself, as well as any compensation payments if you are found to have been negligent.
Why does it matter?
Mistakes happen. In the professional world, even a minor oversight can snowball into a major financial blow for your client. Whether that be an IT Consultant making an error in code, or an engineer’s faulty design. As a professional you have a responsibility to your clients, and if this duty of care is breached, they may be entitled to recover their losses from you through the courts, leading to potentially costly legal proceedings as well as compensation payments.
2. Public Liability Insurance (PL)
What is it?
Like Professional Indemnity, Public Liability covers you for legal disputes. Public Liability covers you against legal liability to a third party if you’ve caused (or are alleged to have caused) injury or property damage whilst providing your services. The third party doesn’t have to be a client, it could also be a member of the public, or even an employee.
Why does it matter?
Although PL insurance isn’t a requirement under UK law for most, clients and trade associations will commonly insist you hold it, particularly if work in a higher-risk industry or provide manual services.. Accidents can happen at any time, and if you were to be found legally liable for an incident, without insurance navigating these legal disputes can be costly as well as the obvious stress they would cause.
3. Employers Liability Insurance
Typically bought alongside Public Liability, this insurance protects you against legal fees and compensation costs if an employee suffers injury, illness or accidental death caused by their employment with you. As a general rule of thumb, if you’re an employer, Employers Liability will be a requirement under UK law.
Why does it matter?
No matter how careful you are in the workplace, accidents can and do happen and you have a duty of care to your employees. Depending on the nature of the injuries sustained its not uncommon for compensation payments to run into the millions. Not only this but the UK government will look to enforce the legal requirement to hold cover, levying fines against businesses who fail to obtain insurance.
4. Jury Service and Legal Protection
What is it?
This policy not only covers the costs if you find yourself in any of a number of legal disputes, such as contract disputes, employment disputes or debt recovery disputes, but also covers your lost income if you’re called up for jury service.
Why does it matter?
Jury service is a civic duty, but it can be a financial burden, especially for self-employed individuals who are unlikely to be paid if they’re not working. This policy ensures you’re not out of pocket should you be called to sit on a jury. Legal disputes are becoming much more common and can arise unexpectedly – whether you’re defending yourself or making a claim against a third party – should this happen you’ll thank yourself for having an insurance policy to call upon instead of paying expensive solicitors fees.
5. Income Protection Insurance
What is it?
Much like Jury Service, if you’re self-employed and need to take time off work due to illness then your income may stop overnight. This policy provides a monthly benefit in the event you’re unable to work for up to a year, as well as a lump sum in the event of accidental death.
Why does it matter?
Whilst it’s not a nice topic to think about, planning for the future if you’re ill or suffer an accident is an important consideration for the self-employed. Without sick pay, having insurance protection in the event you’re unable to work ensures you still have a source of income should the worst happen.
Click here to get a Contractor Insurance quote from Qdos today.
