What are the pros and cons of Contractors’ Insurance
As a contractor, you are more likely to face different risks every day. As well as working on hazardous sites, carrying out hazardous activities, and using specialist equipment, you might end up facing financial and legal risks.
It is important to manage these risks by following the right practices and procedures to prevent accidents but accidents do happen even with the most robust compliance approaches in place. You can cover yourself against these risks by getting tradesmen and contractor insurance.
What types of contractor insurance do you require?
When you are a contractor, it is all about striving to meet and hopefully surpass your customer’s expectations. But even for the best contractors accidents do happen. When they happen, having the correct insurance in place can assist you to maintain the reputation, relationships, and business you have worked so hard to build.
Do you need insurance as a contractor?
Generally, as a contractor, you will work alone and manage your own business, often as a limited company of one person. It means you will not generally enjoy the same extras as employees, such as receiving life, accident cover, or disability. Should something in your workplace go unexpected, the costs and responsibility fall completely on you.
It is also expected for customers to request that contractors have specific sorts of insurance. This is to protect both you and them from financial loss in the event of an accident.
Types of contractor insurance
Unlike many insurance products, there is no particular contractor insurance product that is packaged and ready to purchase. Instead, it is more of an umbrella term used to cover any sort of business insurance used by a contractor. You have to build your insurance policy, combining other insurance policies to create the level of cover you require for your work.
Contractor insurance can be designed up of any of the following. There are a few most common.
Public liability insurance
If your equipment or service causes harm to members of the public or damages their property, this type of insurance covers you for any claims made. It does not cover faulty workmanship but is there to assist if, e.g someone trips over your tool and has a bad fall. It is good to have if you ever work in client spaces or public. This insurance is often a contractual need for offshore contractors in the energy sector.
Employer’s liability insurance
If you employ someone or have someone working under your supervision and direction. This type of insurance is important. Without it, you will be fined for up to a day. It covers you for any claims made by that person if they get injured or ill as a result of working for you.
Professional indemnity insurance
If you are giving a service, rather than a product, you will need this insurance. It covers you against legal costs and claims should your service unintentionally cause a client to lose money or something of value. It is generally used by IT contractors, engineers, solicitors, and people who give professional advice. Clients might ask that you have this cover in place before working with you.
Personal accident insurance
This insurance covers you should you become quite injured while working. It can be beneficial for contractors who do high-risk work or are labor-intensive since you don’t have disability cover or an accident from an employer. Office insurance covers your workshop against damages from flood, fire, or burglary.
If you are a contractor who travels out of the country for work, this cover protects your business tools, company money, and personal possessions. It can also cover legal costs and medical treatment should you be involved in an accident while traveling.
With so many covers to choose from, it can be tough to know exactly which insurance policy to go for. Remember, every industry and each contractor is different. For this main reason, some insurance providers provide special insurance packages for contractors based on their industry. This includes contractor insurance for the IT sector or contractor’s all-risk insurance for those in construction. The purpose behind these bundles is to take some of your homework away defining what your industry is likely to require.
What level of cover do you need?
The products and level of coverage you require depend on you, your industry, your revenue, and the kinds of customers you have. For example, you will not need an employer’s liability insurance if you have no employees. You might also need professional indemnity insurance if you provide professional advice, but the level of coverage depends on your client’s situation.
Cost of contractor insurance
The cost of your insurance policy depends on the insurance products you select and how much coverage you take out on each of them. There are insurance providers dedicated to providing customized contractor insurance. It is good to visit their websites to see what products they provide and get an idea of their prices. Often, they will provide you with a discount for getting several insurance policies through them.
Designing an insurance policy for yourself as a contractor is not always a simple process. It can feel good to know what to include particularly since your field changes with each new client and project. An independent financial adviser can work with you to build the best offer. They will assess your industry and risk level making sure you buy the right products at a competitive price.
The goal of contractor’s insurance
The major goal of contractor insurance is to cover you and your business from suffering financially in the event of legal claims laid against your work. But there are a few things you can do for each project to minimize the risk of this occurring in the first place. The most important factor is to set expectations, communicate regularly, and make sure everyone has the same goal.
