As a contractor, you’ll find that clients and agencies will often insist that you hold adequate insurance before you undertake a contract. Having the right insurance in place will ensure you’re in line with the terms of your contract, and will provide you with cover should a claim be made against you. One of the most important covers for a contractor or freelance professional to hold is professional indemnity insurance (also known as PI.)
PI is a key IR35 indicator. It’s not a requirement for a traditional employee as they’d be covered by the insurance provisions of their end client. Holding professional indemnity insurance therefore provides a clear distinction between contractor and employee. The fact that you, as the contractor, have purchased professional indemnity insurance demonstrates a financial obligation and a responsibility to protect your interests.
Below you’ll find an easy to follow breakdown of what PI is, why you need it, and a few examples of claims so you can see the full picture.
What is it?
Professional indemnity insurance is designed to protect contractors against claims for negligence (such as making a mistake, or giving bad advice.) It also provides cover for loss of documents, loss of data, breaches of intellectual property, and defamation and libel. That’s really quite a lot!
Why do you need it?
If you do make a mistake for which you are responsible or are deemed to have been negligent, then professional indemnity insurance will cover any compensation that you have to pay as a result, as well as any legal costs you’ve incurred in the process. A mistake could end up costing you tens or hundreds of thousands of pounds so it’s vitally important to have the right protection in place. It’ll also cover the cost of fixing any mistake you may have made, which could help you to avoid having a larger claim made against you.
Even if you’re accused of a mistake and you don’t think you were negligent, it’s still costly to defend yourself. Professional indemnity insurance provides you with the protection to be able to defend the claim.
Do you have any example claims?
A structural architect prepared drawings for the erection of some steelwork. However, it was subsequently alleged that those drawings contained errors. £110,000 was then claimed for the costs of alteration as well as the resulting delays in construction.
A web designer used unlicensed pictures on a website they were building for a client. The client subsequently claimed against the web designer for £7,500.
About Kingsbridge
Our insurance package is specifically tailored to the unique needs of those working on a contract basis. Our dedicated team understands the requirements of contractors and freelance professionals, and we’ll provide you with a fuss-free and friendly service that’ll allow you to go about your work safe in the knowledge that you’re adequately protected should anything go wrong.
The most common insurances held by contractors and freelance professionals are professional indemnity insurance, public liability, and employers’ liability. Alongside these Kingsbridge offers personal accident cover and directors’ and officers’ liability as standard, all in one easy to manage package.
We guarantee you won’t find such a comprehensive insurance product at equivalent value anywhere else on the market. Kingsbridge have been looking after contractors and freelancers since 2001. If you’d like to purchase a policy, or simply discuss your insurance requirements in further detail, feel free to get in touch on 01242 808740 or at info@kingsbridge.co.uk
