Business Insurance – What a contractor needs to know
As a limited company contractor operating outside of IR35 it will be your responsibility if something was to go wrong with your work, so to ensure you are able to contract worry free you will want to ensure you have the correct insurance in place.
Getting started – Obtaining the contract
If you are a seasoned contractor, you will be aware that with most contracts the client/agency will require you to have the relevant insurance in place before issuing the contract. If you are new to contracting then don’t let not having adequate insurance in place slow you down in getting your first contract.
Even if the client/agency do not state that insurance is required, ultimately the risk is still yours to take. With getting the correct insurance in place it will then allow you to carry on with peace of mind, as it is better to be overprepared than underprepared and holding the relevant cover could end up saving you a large amount of money.
IR35 and insurance
From an IR35 perspective having business insurance is a positive as it is viewed by HMRC as an indicator of self-employment if you are working outside of IR35.
Professional indemnity (also known as PI insurance) gives protection against claims made by their clients, for any damage caused by professional negligence, loss of data or documents, unintentional breaches of intellectual property or claims of dishonesty.
Professional indemnity insurance protects your business against the settling or defending a client’s claim there is a problem with your work.
As the risks faced by contractors will be different depending on the area of expertise, there are contractor specialist insurers out there that are able to provide policies tailored to the contractors’ areas of expertise.
Public liability insurance will make sure you are covered for any injury or damages caused to a third-party persons or property.
A public liability insurance policy will cover you for any damages claimed plus legal representation.
If you have any employees then it is a legal requirement to take out employers’ liability insurance. Even if you only employ someone for admin or clerical roles you need to ensure they are covered by an employers’ liability insurance.
This is another insurance policy your client/agency may require before you are able to start a contract.