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Being a contractor means that certain legal obligations and financial responsibilities will fall on your shoulder. So business insurance is fundamental for the smooth running of a company. And it’s good news for contractors working through their own limited company – as long as you can prove that the insurance is solely and exclusively for the purpose your business, the amount can be claimed as an expense.
But do you know what insurance you need? Our guide outlines the options available to you depending on your circumstances.
Having insurance as a contractor demonstrates professionalism to your clients and helps to keep your business safe in the event that anything goes wrong. Since being a contractor often carries a certain level of financial responsibilities, a comprehensive level of insurance can also help to keep you safe.
The only kind of insurance which is required by law is employers’ liability insurance. Every other kind is optional, but depending on your line of work, may be required. Below are some of the most common types of insurance for the self-employed.
Professional indemnity is designed to protect you from any claims which might arise as a result of your business. This will cover your company in the event that a client makes a claim against you, including legal costs in your defence as well as any costs that may be awarded to you.
Professional Indemnity Insurance isn’t required by the law, but depending on your profession, may be mandatory. For example, law, financial service and healthcare contractors may be required to take out insurance. You may consider taking out professional indemnity if you work as a consultant or provide your opinion to clients on a regular basis.
You can find more information in our comprehensive guide.
Public liability will be a staple for you if you regularly have clients on your premises, or you carry out work on your client’s sites. This is your protection against injury and damage to the workplace and will cover legal costs alongside any compensation you’re required to pay.
If you have regular face-to-face with your clients or you, there are third parties involved in your contracts or you deal with the general public on a regular basis, it’s highly advised that you have public liability cover.
Employers’ Liability is designed to protect you in the event that an employee falls ill or has an accident in the workplace. As soon as you become an employer you must have a policy covering you for at least £5 million. The penalties are serious – you could be charged up to £2,500 in fines for every day you’re uninsured. You can also face a hefty fine of £1,000 if you’re unable to produce your insurance certificate.
You will also need to take out employers’ insurance if you hire temporary workers on a short-term basis.
When you work for yourself, you won’t have employee perks to fall back on, so it’s important that you’re covered in the event you’re unable to work. But the good news is there are plenty of insurance providers who specialise in supporting the self-employed.
If an accident results in serious injury or even death, personal accident insurance will cover you. This could be beneficial if you work in an environment where accidents are more likely to occur such as a construction site.
Office insurance will protect your work premises and equipment in the event of damage or theft.
IR35 is a complex piece of legislation and sometimes, you can find yourself facing a review from HMRC no matter how careful you are. If this is the case, IR35 insurance can help to cover you if you are deemed inside. There are two types of cover available: defence only, which will cover the fees of handling your case, and comprehensive, which will cover your fees and any liabilities.
The Nixon Williams team is always on hand to provide you with tailored advice regarding your travel expenses. We’re here to make sure you don’t lose a penny of your expenditure when delivering your projects.
To speak to a member of the team and see how we can help, call us today on 01253 362 062.