Guide to contractor insurance
Contractor insurance is designed to protect you against the unforeseen – from making a mistake in a piece of work that results in your client losing money, to personal injury claims from third parties and employees.
If a claim is made against you (even if it’s unsubstantiated) and you don’t have cover in place, you could be left to pay thousands of pounds in legal fees and compensation payments out of your own pocket.
Professional indemnity insurance for contractors
Professional indemnity insurance protects you against allegations of mistakes you make when providing professional services, advice or designs to your client. Many clients will require you to have professional indemnity insurance in place before you can start work.
What could go wrong?
- A project overruns due to a mistake you made during the planning stages. Your client claims against you for the costs they have incurred in the delay.
- Some designs you provided to a client feature incorrect measurements. Your client claims against you for the cost of putting the mistake right.
- You recommend a particular type of software to a client for a particular task. It doesn't deliver the expected improvements and they take legal action against you seeking compensation.
Public liability insurance
Public liability insurance protects you against allegations of injuring someone at work or causing damage to third party property. Similar to professional indemnity insurance, most clients will need you to prove you have public liability insurance cover.
What could go wrong?
- A co-worker trips over your laptop cable, breaks their wrist and is unable to work for several weeks. They claim against you for their lost income.
- Whilst working at a client's office, you spill a cup of coffee over an expensive laptop. They claim against you for the cost of replacing the laptop.
Employers’ liability insurance
Employers’ liability insurance protects you against allegations of injury (or illness) suffered by employees as a result of their employment with you. Every company that has employees is legally required to hold a minimum of £5m cover.
What could go wrong?
- An employee slips on a wet floor at your rented office and injure themselves. They make a personal injury claim against you.
- An employee trips over a cable at your rented office and is unable to work for several months due to the injury they sustained. They take legal action against you seeking compensation.
What other contractor insurance should I consider?
- Portable equipment insurance – protecting your laptop, smartphone and other equipment.
- Occupational personal accident insurance – helping you if you’re accidentally injured at work.
- Directors and officers insurance – protection for you as a company director or officer.
- Cyber & data risks insurance – helping you if you’re the victim of a targeted cyber attack.