Contractor Insurance – Which Ones Do They Actually Need?

We get a lot of questions from Agencies and Contractors alike regarding their insurances; what types of insurance should they buy, how much coverage do they need, and what will these policies protect them from?  Today’s blog looks at the different insurances available on the market and why Contractors might consider purchasing them. 

Types of Insurances

The three most common policies available for Contractors are Professional Indemnity Insurance, Public Liability Insurance and Employers Liability Insurance. These protect against a variety of negligence claims which can arise during or after an assignment for a Client.

New types of insurance pop up regularly to address a wide array of problems or concerns that Contractors have. There are policies available for Business Interruption, Jury Service Cover, Income Protection and Office Contents for example.

Whilst it may not be necessary to take out every possible insurance policy, the Contractor should first assess the risk of not insuring themselves.

Which policies are required by law?

Apart from a few exceptions, limited company Contractors are only legally required to have Employers Liability insurance. Other types of insurance such as Professional Indemnity and Public Liability insurances are recommended as good practice.  

Contractors should also determine whether their contract requires them to take out any specific policies and to what value. Often, it will be a requirement by the Client that the Contractor has Professional Indemnity, Public Liability and Employers Liability Insurance up to a minimum value.

Why are they beneficial?

Other than being a legal requirement, insurance policies such as these protect Contractors in various ways;

  1. As mentioned above, it is commonplace for Clients to require Contractors have certain policies so that the Client is protected if the Contractor makes a mistake.
  2. Having these policies will give Contractors peace of mind that if something does go wrong under unforeseen circumstances there won’t be such serious financial implications.
  3. Taking out insurances such as these can also be beneficial from an IR35 perspective as purchasing insurance policies can indicate that you are “in business on your own account.”

At TBOS we recommend that you request copies of insurance certificates from all new Contractors to ensure that they are operating compliantly.  If you are a TBOS Agency and you aren’t sure which insurances your Contractors need, or even which insurances your Agency needs, please don’t hesitate to call us on 0845 881 1112.