Contractor Insurance

Whether you're a self-employed contractor or you run a contracting business, you'll want to deliver the best experience for your clients, with minimal risks.

As a contractor, your reputation is fundamental, but there may be times where you're held accountable for any accidents or injuries while you're working on a job. You may even injure yourself, or unintentionally damage business equipment.

That's why the right business insurance is essential, as it can protect you both legally and financially.

Do I need contractor insurance?

It is highly recommended that you have contractor insurance to protect yourself and your business against the cost of any claims from clients, employees, sub-contractors, or general members of the public.

It also covers the cost of any damage to any property or equipment and any injuries you may suffer yourself, which may result in loss of earnings.

Is contractors’ insurance a legal requirement?

The only insurance you're legally required to have as a contractor is employers' liability insurance if you employ one person or more within your business.

Other types of business insurance aren't legally required, but are considered essential to help protect you and your business.

What insurance should I have as a contractor?

There are three main types of insurance to think about that could protect you as a contractor:

1. Public liability insurance

Public liability insurance is the most important type of business insurance for anyone working with clients or in public spaces with people present. This protects you if someone is injured or damages their property and your business is involved in the incident.

For example, if a member of the public trips over your unattended tools and injures themselves, public liability covers you against the cost of their personal injury claim. It's worth noting that it won't protect you against any faulty workmanship.

2. Employers’ liability insurance

Employers' liability insurance is a legal requirement for any UK business that has employees, including sub-contractors, unless they're immediate family members. However, if you're a limited company with multiple directors, you are still legally required to have this.

It provides cover for any liability claims, e.g. if any of your employees hurt themselves or become sick as a result of their work, then they hold you responsible and want compensation.

3. Professional Indemnity Insurance

Professional indemnity insurance (PI) covers the cost of legal fees and compensation claims if a client claims you made a mistake when providing professional advice or were negligent when carrying out your professional duties.

For example, if you're an accountant or solicitor and a client sues you for giving them incorrect advice, or you're an IT contractor implementing software that fails or causes subsequent issues for the organisation following the work you've carried out.

What do I need cover for as a contractor?

Here are some extra areas of cover to consider when purchasing contractor business insurance:

• Tool insurance: covers the cost of replacing or repairing lost, damaged, or stolen tools and equipment

• Business and office equipment: protects office equipment like computers, laptops, and printers against theft, loss, or damage

• Hired-in plant insurance: provides coverage for hired machinery, such as diggers and forklift trucks, in cases of theft or accidental damage

• Owned plant insurance: covers theft, loss, or damage (including malicious) to owned plant machinery

• Contract works insurance: specifically for construction workers, covering work in progress on sites for issues like fires or floods

• Income protection: helps protect your income if a serious injury or illness prevents you from working

• Personal accident cover: provides a lump-sum compensation payment if you or an employee are permanently injured or killed in a work-related incident

• Legal expenses insurance: assists in covering legal costs for claims or lawsuits, including employee or client disputes

How can I reduce the risk of a claim against me?

Prevention is better than cure, so your first priority should be to try and prevent problems before they occur. The best ways in which you can do this are:

• Check your contract: read every section in your contract and only sign it when you understand and are happy with everything that's included. And keep copies so you can refer back to it.

• Confirm your deliverables: make sure you ask for an outline of deliverables and project timelines so you understand exactly what is expected of you before you start work.

• Agree milestones and sign offs: If you're taking on bigger projects, break these down into smaller sections and keep communicating with your client by asking them to sign off when you reach these targets.

• Make notes of meeting objectives and outcomes: take minutes or record meetings and conference calls if possible so you can refer back to these if any conflict arises over what was discussed in these sessions.

• Get written confirmation: It's crucial to get written confirmation via email so you have a paper trail to refer to if you're unsure or need to prove what you've been asked to do.

Finally, comparing the appropriate insurance for your business is the best way to protect yourself as a contractor. Find the right cover in minutes from leading UK business insurance providers by comparing quotes with MoneySuperMarket.