What insurance contractors need?

We know it can be a minefield for contractors when it comes to purchasing the right contractor insurance to protect you and your business.

Realistically, what insurance a contractor needs will come down to their individual risks, ways of working and business structure.

But, with the volume of products available, it can become overwhelming trying to understand what might apply to you. So, we’ve explained the most common types of insurance a contractor might need.

Disclaimer: The following is a general guide to contractor insurance cover types. Exact coverage may differ per policy and insurance provider. Please always check your policy documentation and/or terms & conditions for more details.

A comprehensive guide to insurance types

Professional indemnity insurance

Professional indemnity insurance is designed to protect contractors against claims of professional negligence, like mistakes and errors, while providing professional services or advice.

If you do make a mistake that causes your client financial loss, professional indemnity insurance can cover compensation. It can also cover legal costs you incur in the process, including client claims and legal claims tied to errors in your work.

While not legally required, many clients ask for proof of professional indemnity insurance before work starts, with required limits often ranging from £50,000 to £5 million depending on project requirements.

A professional negligence claim could end up costing you thousands of pounds so it’s important to have the right protection in place.

Public liability insurance

Public liability insurance can cover claims against you for third-party property damage or injury caused by your business activities. This can include coverage for legal fees to defend a claim as well as compensation for injury or damage.

Many clients might ask for public liability cover as a contractual requirement, especially when working in public or client spaces. Stringent contract requirements can even mandate minimum coverage amounts, so keep an eye out for any specific details when signing.

Public liability cover limits commonly start at £1 million, going up to £5 million and premiums will depend on the nature of your work, the projects you work on and any unique risks you face.

Employers’ liability

Employers’ liability insurance is a legal requirement for most businesses that employ anyone, with a minimum required cover limit of £5 million. If you don’t hold employers’ liability insurance when you should, you could face fines of £2,500 per day.

It can cover you if an employee claims against you for injury or illness caused by working for you, including full-time and part-time employees. You might also need it for apprentices, trainees and temp workers.

We have a guide to employers’ liability requirements and exemptions that goes into more detail about what you need to know.

Occupational personal accident cover

Accidental injury that leaves you unable to work could result in significant financial loss due to cancelled contracts or delayed projects.

Whether you’re injured in your home office, commuting to a work site, or visiting a client office, personal accident cover can typically pay a weekly benefit while you recover.

This is normally only if you’re injured while doing your job or travelling between work locations, and will be subject to the terms of your policy.

Legal expenses insurance

Running a business can sometimes lead to unexpected legal disputes. Legal expenses insurance can help cover legal defence costs for eligible claims involving unpaid invoices, contract disputes or dealing with employment-related issues.

Depending on your policy, legal expenses insurance may help with issues like:

• Contract disputes with clients, suppliers or subcontractors
• Recovering unpaid invoices and debts
• Employment disputes and tribunals
• Tax investigations or HMRC enquiries
• Access to legal advice and support

It can also cover lost income from jury duty. Some insurers might offer a set sum per day towards lost earnings while others may pay your net salary minus any compensation you receive from the courts.

Cyber liability insurance cover

Many contractors rely on digital systems to store information, communicate with clients and deliver services. Cyber liability insurance can help protect your business if you’re affected by a cyber incident, like a data breach, ransomware attack or other malicious cyber event.

Ultimately, it can provide valuable financial and practical support if sensitive information is compromised or your business operations are disrupted. This can be particularly important for contractors who handle client data, access customer systems or work remotely.

Cover often includes:

• Data breaches involving sensitive or confidential information
• Cyber attacks, including malware and ransomware incidents
• Costs associated with notifying affected customers
• Data recovery and system restoration expenses
• Business interruption caused by a cyber incident
• Legal defence costs or regulatory penalties (where insurable by law)
• Access to specialist cyber response and IT support services

Directors’ and officers’ liability

If you’re working through a limited company, you could be held personally liable in many scenarios like legal claims and contract disputes. As a business owner or director, action can be taken against you by a number of people: a regulator, your end client, or even HMRC if they think you haven’t been sticking to the rules.

Directors’ and officers’ liability for contractors can cover legal defence costs and certain fines, protecting your financial assets and in turn, the business you’ve built.

Business equipment insurance

Whether you’re working from home, travelling between client sites or operating from a dedicated office, your equipment is often essential to delivering your services. Business equipment insurance can help cover the cost of repairing or replacing items if they’re lost, stolen or accidentally damaged.

It normally covers devices like mobile phones, computers and laptops, as well as specialist business-related equipment like cameras, graphic tablets and audio-visual kit.

Choosing the right insurance

Once you understand what different types of insurance can cover, you then need to decide which ones you might need, research suitable cover options and compare which product is best for you and your business.

Know what insurance you might need

As a starting point, you can answer a few simple questions to get an idea of the risks you face and what insurance might be beneficial:

• Do you work at clients’ homes or premises (or do they visit you)? – consider public liability insurance
• Do you employ anyone? – you could be legally required to hold employers’ liability insurance
• Do you offer professional services or advice? – consider professional indemnity insurance
• Do you use digital systems to process or store business files or customer data? – consider cyber liability insurance cover
• Are you a company director? – consider directors’ and officers’ insurance
• Are you at risk of facing contract disputes, unpaid invoices or HMRC tax investigations? – consider legal expenses insurance

Comparing policies

It’s also important to take the time to compare quotes fairly on multiple factors – not just price. The reality is, a cheaper policy won’t save you money if it misses the mark on the insurance coverage it offers. You could be left footing the bill following an unsuccessful claim. And on the other hand, more expensive insurance won’t always equal superior coverage.

To help you out, we’ve put together a useful guide on how to compare insurance quotes.

Contractor Insurance with Kingsbridge

Trusted by over 33,000 contractors, we’ve used our years of expertise to build a business insurance policy specifically for UK contractors.

Our comprehensive Contractor Insurance includes standard cover like Public Liability insurance, Professional Indemnity, Employers’ Liability insurance, Personal Accident cover, and Directors’ and Officers’ Liability all under one policy. It’s designed to cover common risks that contractors can face, while being flexible to different specialisms and business sizes.

That’s why it can also be tailored with add-ons like Cyber Liability insurance and Legal Expenses cover.

Interested in Contractor Insurance or simply have a few questions about our cover? You can get a quote online in minutes or speak to our dedicated in-house team on 01242 808 740.