What you should look for in a business insurance policy
Choosing your business insurance as a contractor can be a bit of a minefield. There are so many different policies out there with so many different benefits, it can be difficult to work out which policy is the one that gives you everything you need. So, what are the key features that contractors should be on the lookout for in their business insurance?
Professional indemnity cover
Professional indemnity cover is essential insurance for any contractor. It’s usually stipulated within a contract so you would need it in place before starting work with most clients. In short, it protects you against claims of negligence, which could arise should you make a mistake or give bad advice. If your client were to make a claim against you in this instance, your professional indemnity insurance would cover the costs, protecting you financially (this is also a key IR35 indicator as it shows you take on financial risk).
Some insurers, such as Kingsbridge, will offer this cover under ‘any one claim’. This means that the level of cover you are insured for is held for every claim you make, even if you claim during the policy term. Meanwhile, some insurers will only offer this cover ‘in the aggregate’. This would mean that you are only covered for your total sum insured for the whole policy year.
So say you had £1 million of cover for professional indemnity and you made a claim of £400,000, this would leave £600,000 cover left for professional indemnity. This is something you should consider when purchasing insurance, as this could leave you underinsured or in breach of your contract.
Public liability insurance
Public liability cover is another insurance often stipulated in contracts. It provides cover for injury to third parties or damage to their property caused while carrying out your work. So, if you accidentally break a client’s computer, or trip a client’s employee with your equipment, injuring them, you’re covered against any compensation claims and legal fees arising, protecting you from potentially very steep costs.
Personal accident cover
Occupational personal accident cover for contractors can be a real lifeline should you find yourself injured while carrying out your work and subsequently unable to work. This kind of insurance will typically offer a weekly payment for a set period of time, covering your costs while you are unable to earn. There is usually also a lump sum payable in the case of death or permanent disablement. It can prove a real source of relief for contractors who, when faced with an injury that doesn’t allow them to earn, aren’t otherwise able to get any sick pay.
Employers’ liability cover
We always get a few odd looks for this one as most contractors don’t have any employees. However, employers’ liability cover is required by law in certain circumstances so it’s wise to assess whether or not you need it. For instance, should you hire another contractor to carry out work on your behalf (another key indicator of IR35 as it would demonstrate the right of substitution), this insurance would cover you should they have an accident carrying out that work and make a claim. In addition, it would cover you if you employ a spouse or close family member in an administrative or clerical role.
Directors’ and officers’ liability insurance
What a lot of sole traders and limited company contractors don’t realise is that they can be held personally liable for any transgressions of rules, even if accidental. Action can be taken by regulators, clients or HMRC if they think you’ve done something wrong and this is where directors’ and officers’ liability cover steps in. It’s a safety net covering legal fees and defence costs should you be accused of financial mismanagement, legislation breaches, failure to comply with health and safety, or any flouting of company law.
As well as the main insurances outlined above, it’s good to find an insurance provider that gives you access to optional add-ons to your policy, so you can customise your cover to suit your circumstances. Add-ons you may want to consider include:
- Legal and IR35 insurance – covering you for a range of legal costs as well as covering you in the event of an IR35 investigation;
- Health insurance – giving you a range of health and wellbeing benefits;
- Cyber liability cover – protecting you and your business, should you be the victim of cybercriminals.
These can usually be added to your policy either when you initially purchase it, or at a later date.
Wanting it all
Right now you might be thinking that shopping around for all those different policies is going to be a nightmare and, if you had to find them all individually, you would probably be right. Thankfully, Kingsbridge offers a comprehensive package of business insurance for contractors which includes:
- Professional indemnity: up to £5 million any one claim and unlimited in the aggregate;
- Public liability: up to £10 million any one claim and unlimited in the aggregate;
- Employers’ liability: up to £10 million any one claim and unlimited in the aggregate;
- Directors’ and officers’ liability: £100,000 any one claim and in the aggregate;
- Occupational personal accident: weekly benefit of up to £500 for up to 52 weeks, and personal accident and disablement cover up to £100,000, payable as a lump sum.
We also allow you to add on a range of excellent optional extras including IR35 Protect, health insurance by Equipsme, and our cyber liability cover. For more information, you can speak to our brilliant team of experts on 01242 808740 and let us help you find the right insurance for your contractor business or find out more here.