If you work as a contractor, you need specialist contractor insurance that protects you and your business against any financial risks and covers your legal responsibilities.
Contractor insurance is becoming more of a must have than a nice to have, as many clients will legally require you to have contractor insurance before entering into a contract with you.
Specialist contractor insurance is a necessity as anyone can make a mistake at work. In many jobs you can just learn from it and move on, but in contractual work clients can claim against you for mistakes that you might or might not have made but which they feel have impacted them financially.
What does contractor insurance include?
A contractor insurance policy can be tailored to meet your own business needs. As standard your cover should include:
1. Professional indemnity insurance
Your clients may ask you to have professional indemnity insurance, which supports your independent status.
The legal costs could be so high that you could go out of business if a client sues you, even if you haven’t made a mistake. Whether it’s a disagreement over contract deliverables or loss of a client’s personal information, business can be unpredictable.
Professional indemnity insurance covers:
- Infringement of intellectual property rights
- Unintentional breach of contract
- Lost or stolen files
2. Employer’s liability insurance
Employer’s liability is a legal requirement if your business has any employees. It covers any legal action against you by employees or subcontractors of your company.
Check to see if you have a right to substitution clause in your contract. If you do, it would be useful to protect yourself with contractor insurance.
3. Public liability insurance
Public liability insurance is another important type of contractor insurance to consider. Public liability covers you for any third party claims for damage to property or injury, for example if a visitor to your office trips on a broken step. Your clients will take this out for their employees, but you won’t be covered so you should consider having your own policy.
4. Product liability insurance
If you manufacture products or install them as a contractor you are likely to need product liability insurance as part of your contractor insurance. If one of your products causes injury or damage, the legal costs could escalate quickly and even, in the worst case, cause your business to fold.
5. Office insurance
As a contractor you might work from home or you might have your own premises, but your office furnishings and equipment need to be insured against theft or damage with an office insurance policy.
6. Building insurance
Building insurance can cover any building you use for your business against damage from flooding, fire and accidental damage.