What insurances should your contractor base hold?

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Lauren Wallace-Thompson
04 Apr 2022 @ 12:29 pm
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Getting your contractors ready to go as soon as that job comes in is one of the key aims of a recruiter. You want to be able to tell the client they can start right away, and know that everything is in place for a swift and seamless onboarding: the contract, the IR35 status determination, the right-to-work checks.

Of course, one of the vital things that contractors need to have in place before they start any gig is proper business insurance. Clients want the reassurance that they are engaging professionals and that they are covered in the event that something goes wrong or your contractor doesn’t deliver what they’ve promised. Contractors should expect to insure their businesses and this is generally included as a business cost that would be included in their overhead calculations.

 

IR35 status and contractor insurance

The shift to the IR35 legislation in the private sector has made insurance more important than ever for contractors that want to continue working independently through a PSC, especially now that HMRC’s ‘soft-landing’ to the legislation is due to end on April 6th 2022. Holding business insurance can help show that a contractor is a genuine business taking on financial risk, which can be a positive indicator of being outside IR35.

 

What insurance should contractors hold?

There are several different types of business insurance that you might recommend to your contractors and this may be dependent on the contract. In this guide, we take a look at the most commonly requested protections, what they are, and why your contractors should hold them. Kingsbridge have developed a package of insurance, which will ensure your contractor base can get everything they may need in one place. The cover can be tailored to suit you or your end-clients specific requirements.

 

Professional indemnity insurance for contractors

Your contractors love the freedom, flexibility and independence of working for themselves. But it also leaves them exposed to risks. If your contractors are accused of negligence – whether that’s giving bad advice, making mistakes, breaching copyright, violating confidentiality or defamation – professional indemnity insurance from Kingsbridge will step in.

 

Public liability insurance for contractors

Contractors are likely to be working out and about: at a client’s premises, on-site, and even around the world. Our cover is global as standard (excluding USA/Canada which we may be able to add on for an additional fee). Public liability insurance is there to provide protection in the event that someone is injured or their property damaged due to the actions of your contractor or their limited company. It will cover damages, legal costs, fees and expenses to put things right. As you can imagine, public liability claims can be very costly. Your client may pass on this liability to you, so insisting your contractors hold this cover will protect your recruitment business as well as the contractor’s business.

 

Employers’ liability insurance for contractors and and personal service companies (PSCs)

Holding employers’ liability insurance is a legal requirement for some businesses. This cover is there to look after any employees or deemed employees of the business in the event they are injured or harmed as a result of their activities at work. Contractors who have employees, apprentices, or even their spouse or family members supporting them with their work need this insurance in place. It might also be called into play if your contractor needs to invoke the substitution clause in their contract, which is a key indicator of being outside IR35.

 

Directors’ and officers’ liability insurance for contractors and PSCs

If your contractors are operating through their own personal service companies (PSCs), their directorship means they can be held personally responsible for legislative breaches or offences related to the running of their business. Claims could be brought against a contractor by regulators, HMRC, clients or employees, on matters such as health and safety breaches, financial mismanagement or breaches of trust. Directors’ and officers’ liability insurance will protect against this.

 

Personal accident cover for contractors

Personal accident cover is the most claimed-against part of our contractor insurance package. It provides a safety net if your contractors are injured in an accident in the course of their self-employed work, giving them an income of up to £500 per week while they recover. It will also pay out a lump sum if an accident at work causes them permanent disability or death.

 

IR35 Protect insurance

The recent changes to IR35 legislation have meant there is increasing appetite among contractors, end-clients and recruiters to take on extra protections for “outside” engagements. While it’s not a substitute for good compliance, IR35 insurance can help mitigate the risk, protecting everyone in the contractor supply chain in the event of an investigation by HMRC. It will provide legal expertise and any taxes, interest and penalties for IR35 investigation, flexing to cover whoever HMRC deems liable for the infringement of off-payroll working rules.

 

Do my contractors need all these insurance policies

While some insurances, like employers’ liability, can be a legal requirement, others are optional but highly recommended for contractors. Recruiters will know from experience that end-clients can pass on significant levels of liability to recruiters. One sure-fire way to mitigate this risk is to ensure that your contractor base hold the required level of cover to provide protection.

If you’d like to make sure your contractors are fully covered and ready to step into that next role, team up with Kingsbridge. Recruiters can affiliate with us and earn rewards for each contractor that takes out a Kingsbridge insurance package. They get all the cover they need in one place, and you get reassurance for yourself and your client that everyone is protected should the unexpected happen. We can deal with the administrative burden for you and even let you know when a contractor’s insurance policy is up for renewal or cancelled. We also have a range of solutions in place to support recruiters with their IR35 compliance – get in touch with our partnerships team today to find out more.


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