Do I need public liability insurance as an engineering contractor?
Back in February, we wrote a guide for engineering students and early-career engineers considering a career move into self-employment. In it, we outlined the pros and cons of becoming an engineering contractor, as well as giving ideas for the engineering fields you may choose to work in, what qualifications you may need, how to set up a limited company and how to get the right insurance in place. If it turned your head and you’re now seriously thinking about becoming a self-employed engineer, you are probably researching everything you need to set up your business, including what insurances you’ll need.
In fact, you’re probably looking at different insurances and thinking, ‘do I really need that?’ Or, ‘maybe I could save some money if I left off that insurance…’ You certainly wouldn’t be the first new contractor to think that, especially when it comes to public liability. After all, it sounds more like something events companies need, not engineers. Kingsbridge is here to guide you through exactly what public liability insurance is, and why you, as an engineering contractor, absolutely do need it.
What is public liability?
Public liability insurance (also known as general liability insurance and third-party insurance) provides cover for damage to third-party property and/or injury to third-party people. Third parties could include your clients, people working for them, or other members of the public. What this means is that if somebody is injured, or their property is damaged as a direct result of your business activities, then you could be held responsible. Your public liability insurance would cover you for:
- Legal fees
- Repair costs
- Professional fees
- Medical fees
As an engineer, there are lots of situations where you might need public liability insurance. For instance, a civil engineer is surveying a site for the start of a proposed new highways infrastructure. You have put your work bag down on the floor while you note something down and a passing member of the public trips on it, injuring themselves. They make a claim against your company but, as you hold public liability insurance, your costs are covered.
Alternatively, while working at a processing plant on an engagement, a chemical engineer accidentally knocks over some specialist equipment belonging to another contractor on the site. This is costly to repair and/or replace, but your public liability insurance covers this for you.
Of course, these are just smaller-scale examples. But within the engineering sector, you will likely be working around large-scale engineering machinery or industrial plants and so the potential for huge claims is there as well and this shouldn’t be taken lightly. Could you afford to pay out a claim worth hundreds of thousands – or even millions – if you did not have insurance to step in for you?
Is public liability a legal requirement for engineers?
Public liability cover is not a legal requirement for contractors, including those in engineering. This means you cannot be forced to hold it by law. However, it could (and often is) a contractual requirement. This means that your end client or recruiter can specify in your contract that you hold a certain amount of public liability insurance. In this case, to not hold it would put you in breach of contract or would prevent you being able to take on the job altogether.
What other insurances should engineering contractors consider?
Public liability isn’t the only insurance you need as an engineering contractor. Professional indemnity and employers’ liability are usually considered essential as well, and will often be stipulated in the wording of your contract.
Professional indemnity is there for when you make a mistake and, let’s face it, mistakes in engineering can be very costly indeed. If you are deemed to have been professionally negligent by a client then they may well make a claim against you for damages. If you hold sufficient professional indemnity cover, this will take some or all of that financial risk away.
Employers’ liability, meanwhile, will cover you should an employee become injured or ill as a result of working for you. This includes, for example, if you employ your spouse or partner in an admin role, or if you hire another contractor as a substitute, as per any substitution clause in your contract.
To save you shopping around, Kingsbridge provides all three of these key insurances within our contractor insurance package. This one-stop shop for business insurance gives engineering contractors the cover they need all in one go. It includes:
- Public liability
- Professional indemnity
- Employers’ liability
- Directors’ and officers’ liability
- Personal accident cover
You also have the option to add on additional cover such as IR35 insurance and cyber liability cover. For more information or to get a quote you can either go online or contact our friendly, expert team.