What you Need to Know About Contractor Insurance
The work of self-employed contractors, freelance contractors and subcontractors has risks which, if unmanaged could be business threatening. A way of mitigating against these risks is to take out various types of contractor insurance.
Have a look below to find out more about contractors insurance, what it involves, what it includes and where to get it.
Are All Contractors Required to Have Insurance?
Depending on the industry you work in, contractors insurance may or may not be a regulatory requirement. To find this out for sure, get in touch with your regulatory body. As a general rule of thumb, the only insurance required by law is that of employers’ liability (see below for more information). This applies to all types of contractors including self employed contractors and freelance contractors.
However, even when insurance isn’t required, it may still be a good idea to have it. The reason for this is much the same as the reason why you insure your home; the cost of insurance is just a fraction of what the cost would be should the worst happen.
What Is Employers’ Liability Insurance and Why Do I Need It?
The majority of employers are required to have employers’ liability insurance. The only exclusion here is if you are the sole director/employee of your company. Once you have more than one worker in your company, employers’ liability insurance becomes a legal requirement.
In law, employers are responsible for the health and safety of their staff while at work. However, accidents do happen and as a result, staff may get injured, or former employees may develop illnesses as a direct result of their employment. If this happens, then they may be entitled to compensation.
Employers’ insurance covers against this by ensuring that you have a minimum level of insurance.
What Is Professional Indemnity Insurance?
Professional indemnity insurance protects you against any claims of alleged poor service, inadequate work or negligence. This includes the costs of legal expenses as well as any other damages or costs that may be awarded as a result of the case. Even the best professionals make mistakes every now and again, and professional indemnity insurance can protect you and your business against the cost of this.
How Is Professional Indemnity Insurance Different from Contractors Liability (Public Liability) Insurance?
Where professional indemnity insurance covers against negligence in the work or service, contractor liability insurance protects against injury or damage to third parties as a result of the work being performed. For example, if you were working on a site and someone got hit by a falling object, and it was your fault (e.g. you didn’t risk assess properly), then you could be sued. Public liability insurance protects you against the cost of being sued including any legal costs incurred and any damages awarded against you.
What Does Contractors Equipment Insurance Cover?
Many contractors are reliant on the tools and equipment required to do their daily jobs. Tools and equipment can be expensive to purchase and if the tools were stolen, damaged or lost many contractors wouldn’t be able to immediately replace them. This would have a huge impact on their ability to perform their everyday business. To mitigate against this, contractors can purchase equipment insurance. As with all policies, what this actually covers depends on the policy on offer. However, common elements covered include:
- Protection against theft, including theft from an unoccupied vehicle (as long as the vehicle has been left secured)
- Protection against accidental loss or damage of equipment (normally up to a pre-specified value per item)
- Cost of any hire charges incurred as a result of loss or damage
What Is All Risk Insurance for Sub Contractors?
This subcontractor insurance policy refers to contract work undertaken as part of a construction or civil works project where there is a risk of loss or damage.
The ‘all risks’ part of the policy means that the policy will cover all loss or damage to property and/or materials other than where exclusions have been applied. Typically, exclusions will include damage to the pre-existing structure and damage to structures that are not part of the contracted work.
Typical features of the subcontractor insurance policy will include:
- Cover for owned or hired machinery/equipment
- Cover for damage to permanent and temporary works
- Cover for materials
- Post-works cover
Why Do I Need a Contractors Insurance Certificate?
A certificate of insurance demonstrates that you have the appropriate levels of insurance to cover your business against any potential claims. The details included on the certificate include:
- The type of cover you have
- Any cover limitations
- Name of the provider
- Policy number
- Value of cover
When bidding for work, this is important as it is often a requirement of the potential client that any contractors have the correct levels of insurance. The reason why potential clients require this is that they need to be sure that if there are any claims for damages, injuries or work of a poor quality, they aren’t going to be held liable for them.
In some instances, a client may require you to show the certificate. This is just to ensure that you actually have the cover you said you have.
Where Can I Get Contractors Insurance?
Contractors insurance can be invaluable and protects your business against risks such as being sued for negligence, injury and theft. However, knowing where to purchase the insurance can be difficult. In such a crowded marketplace, many companies sell contractor insurance.
How Invicta Business can Help You
Here, at Invicta insurance, we’re a broker who have access to many companies and with our specialist knowledge, we can not only advise you on the best type of insurance but also we find you the best value for money one.
If you’re looking for insurance or you’re not sure what you need, give us a call on 0330 0450032. One of our insurance team members will be able to help and provide you with a competitive quote.