Ask The Expert – Contractor Insurance
If you are contracting through ADLIB as a Limited Company, you are aware that having insurance is essential. Those new to contracting or new to contracting through us often ask “Why?”
To answer this question we caught up with the experts at Kingsbridge Contractor Insurance, Mark Everett provides us with the key facts – straight from the expert’s mouth. Whether you’re already contracting, simply seeking some clarification or are considering making the leap to freelancing, the below will be relevant to you. Here’s our chat:
ADLIB: Why do those contracting as a limited company need insurance?
Mark Everett: It’s simple – contractors and freelancers need insurance cover to protect themselves and their business as they go about their work. Without the right insurance in place they leave themselves, as well as their client and their agency, open to any number of claims.
Having cover in place gives a contractor the peace of mind to get on with their work. We know that these people are experts in their fields, but everyone makes mistakes occasionally and, when you work for yourself, those mistakes can be extremely expensive. You wouldn’t travel in a car without a seatbelt or ride a motorbike without a helment. This isn’t any different.
ADLIB: What exactly can be covered by insurance, what are the different types of insurance out there that you recommend to freelancers and why?
Mark Everett: The three most commonly claimed upon areas are Professional Indemnity (PI), Public Liability (PL), and Personal Accident Cover (PA).
PI covers contractors against claims for negligence, whether that’s making a mistake or giving bad advice. It’ll also provide protection against things like loss of documents, loss of data, or a breach of intellectual property. Furthermore, PI acts as a key IR35 indicator and is something that the vast majority of agencies and clients insist upon their contractors holding before they begin work.
Sometimes we find that contractors will purchase insurance cover to get the job and will then cancel it straight afterwards. This isn’t a good idea. Retroactive cover will protect you against any work you did up to six years in the past.
PL is essential for contractors if they’re responsible for anyone who might be affected by their actions. It provides cover for damage to third party property or injury to third party persons, as well as covering any legal fees that might arise as a consequence of any claims they have to defend.
Even if a contract doesn’t expressly stipulate that PL is required, it’s a still a very good idea for contractors to hold it as it’ll mitigate any risks they might face.
PA is actually the most claimed upon part of our contractor insurance policy. A regular, salaried employee would generally be protected by their place of work. As a contractor, this safety net isn’t in place. If an injury occurs as a result of an occupational accident and the worker is left unable to work there’s a very good chance they’ll be looking at a significant financial loss (not to mention the likely loss of their current contract.)
PA cover pays out a weekly benefit whilst they recuperate and, in the event of a permanent disability or death, a lump sum would also be paid out. Having PA in place means the insured person won’t have to worry about their bills, the weekly shop, the mortgage or any of the other things they might take for granted when they’re working and earning money
ADLIB: Why do so many companies make it part of the contract that those contracting for them have to have insurance?
Mark Everett: Again, this is a simple answer. Companies require contractors to have insurance in place to protect themselves. A contractor isn’t directly employed by the company and, as such, won’t be protected by their insurance.
By making sure a contractor has the right cover the company is protecting itself, as well as the contractor. In most cases the end client will look to pass the responsibility back down the chain to the initial agency. Having a contractor covered is the best case and safest scenario for all parties involved.
Thank you Mark for sharing!
About Kingsbridge Contractor Insurance: Kingsbridge have been looking after contractors for over a decade. They’ve watched the market develop and grow at a rapid rate, and haveve been there to provide cover throughout all of it. They take care of over 33,000 contractors.