Why do I need insurance if I’m a contractor running my own limited company?
We request proof of insurance for all limited company contractors - why? Sometimes, it’s a contractual requirement of the end client. End of. But that’s not always the case, and we will still request this. That’s because it is our duty as a professional recruiter to ensure that both our company and yours are adequately protected in the event that something goes wrong when you are working on an assignment. When you’re supplying your services through a limited company, you are engaged as a business, and your business, like any other, needs to insure itself against risk.
Not quite convinced? Read our blog by guest blogger Simon Nixon, who, as a limited company contractor, is in the same position as you.
Here are some key points for you to bear in mind:
What is it and what does it cover?
There are three types of insurance, Professional Indemnity, Public/Products Liability and Employers Liability.
Professional Indemnity covers you
- If a business brings a claim against you for negligence
- If your work causes a financial loss to your client
- As a result of your work, they lose the client
- If you need help with legal and court costs
This is the part that could put you at massive financial risk if it ever happened. And it does happen. So get covered.
Public/Products Liability covers you (and up to 5 people working for you)…
- If you break any kit in someone else’s office
- Or if someone drops a printer on your foot
- If something in your home office blows-up
Basically it’s you covered in the environment of your work. Your ‘client’ is already taking this insurance out for THEIR employees. You are not covered. You are an employer. Time to wake up.
Employer’s Liability covers claims made against you by employees or subcontractors of your company. If you’re a one man band then this may not be relevant or required, but if you do employ anyone else (i.e. anyone else works through your company) then it’s a legal requirement to have this insurance. If you have a right to substitution clause in your contract, then it’s a good idea to cover yourself. On the up side, this sort of insurance is normally inexpensive to buy.
Still not sure?
Be reassured by these facts:
- It’s not expensive.
- We can afford it (assuming we keep a bit back for those rock & roll trappings).
- More and more clients are demanding it. More like motor insurance, it’s getting to a point where you almost don’t have a choice.
- If you get into a situation where you need the insurance policy to protect you and you don’t have it, it will most likely take you under in fees and potential pay-outs and liability.