What insurance do I need as an IT contractor?
With IT contractors in serious demand, there’s never been a better time for IT professionals to be self-employed. Although there was a slight dip in that demand earlier this year, it wasn’t really enough to dent the increasing hunger among end clients for IT contractors and their skills.
Some skillsets are in short supply as well – notably development, digital, CNC, data, software, and engineering and technology. This is driving up rates for contractors skilled in those areas and making it potentially very lucrative to be a limited company contractor in the IT sector.
However, whether you’re already in the contracting game, or are considering a move to self-employment, all the growth in your sector is meaningless if you don’t have the right insurance in place. Why? Well, without it you put yourself at some serious financial risk – and that’s if you can even get hired in the first place.
Many clients and recruiters have some minimum insurance requirements written into contracts. It’s wise, then, to make sure you have your insurance in place before you start putting yourself forward for roles as an IT contractor. But what insurance do you need to get started?
Professional indemnity insurance
Professional indemnity cover is a really useful piece of insurance for an IT contractor like yourself. It essentially covers you for mistakes you might make when carrying out your work that could see you face a negligence claim, but it can also cover you for loss of data or documents, defamation, loss of money or goods, breach of copyright or confidentiality.
Imagine you accidentally wipe a client’s server of vital data that they need to run their business, they could sue you for negligence. Professional indemnity insurance safeguards your business so should that claim be successfully made against you, up to the limit of your indemnity. This means you don’t have to suddenly find hundreds or thousands of pounds to make it right.
Public liability insurance
Public liability is often stipulated in contracts as necessary. It covers you against damage to property belonging to a client or member of the public as well as physical injury to a client or member of the public.
As an IT contractor, imagine you’re working from your laptop in your client’s office. However, you don’t safely tape down the power cable and a member of your client’s team trips and injures themselves. Should you be held liable and a compensation claim made against you, your public liability insurance would step in to cover the costs incurred.
Employers’ liability insurance
Employers’ liability cover is one that many IT contractors quiz us on as they don’t employ anyone. However, many employ their spouse or partner in an administrative role. It also counts if you temporarily employ a fellow contractor as a substitute on a job. Should they suffer an illness or injury as a result of working for you, your employers’ liability insurance will cover you for compensation, medical expenses, etc.
Directors’ and officers’ liability cover
Directors’ and officers’ liability, sometimes known as D&O protects you as a limited company director against claims made against you for contravening legislation and regulations such as health and safety, financial regulations and company law. The insurance gives you the means to properly defend yourself against such claims, as well as covering the cost of any compensation.
Occupational personal accident cover
Personal accident cover is there to cover your income should you find yourself unable to work due to an injury sustained while carrying out your duties. It will cover you with a weekly sum for up to 52 weeks, a lump sum should you suffer permanent disablement, or even a lump sum to your estate should the worst happen.
You may be thinking that being an IT contractor isn’t especially dangerous but this insurance even covers you for your journey to and from work. So should you find yourself in a car accident during your commute, you could be covered for loss of income.
It’s worth having just to give you complete peace of mind.
With the off-payroll working rules changing in April 2021, you may now find that sometimes liability for taxes, interest and penalties lies with you, but at other times with your end client or recruiter.
IR35 insurance, such as Kingsbridge’s IR35 Protect, flexes to cover whoever holds the liability and has the benefit of making you a more desirable hire by removing the element of risk. This is particularly useful for IT contractors who often find themselves working with large, risk-averse clients who may have concerns about hiring a limited company contractor.
Clients and recruiters can hire you safe in the knowledge that they’re covered in the event of a HMRC investigation, whilst you can rest easy knowing the same is true when the liability lies with you.
Kingsbridge’s business insurance offers contractors public liability, professional indemnity, personal accident, employers’ liability and directors’ and officers’ liability in one convenient package; making it easy to get the essential cover you need as an IT contractor without having to purchase lots of separate policies.