It makes good sense to protect both your business and yourself against the unexpected. Sometimes it can be a legal requirement. If you employ staff, for example, you need Employer’s Liability Insurance as a minimum. As a contractor and director of your own limited company you should carefully consider your business insurance cover for three main reasons: potential liabilities, income security and demonstrating your IR35 compliance.
Business insurance is a form of risk management. In terms of potential liabilities its function is to limit the exposure to your business against the risk of a loss. It allows you to transfer that potential risk to another party, your insurer. It brings with it the peace of mind that if things go wrong someone will be on hand to help deal with the matter on your behalf and pick up the majority, if not all, of the associated costs. When it comes to your livelihood, insurance can give you income security in the event that a workplace accident prevents you from working.
As an independent contractor it is important to understand and accept the financial risk you may incur through your work. You should consider the following questions carefully:
- Do you provide professional advice?
- Do you visit clients' premises or do they visit you?
- Do you employ your spouse?
- Are you concerned about yours and your company’s legal duties?
- Would your income stop if you were injured at work?
If your answer is ‘yes’ to any of these you are exposed potential to risk.
The Value of Effective Business Insurance
If you fail to put suitable business insurance in place, your company faces potential liabilities for all costs including legal costs, compensation and defence of any claims, even unfounded ones, made against you or your company. Your income security could also be threatened if you have an accident at work. The real value of insurance is the reassurance that unanticipated incidents can be dealt with while your business continues.
You are at risk if your clients consider your work substandard or defective, you give questionable advice during the course of an assignment and if this impacts on other aspects of a much larger project. Professional Indemnity Insurance covers you for such claims made against your company.
Directors’ and Officers’ Liability Public Liability insurance provide financial reassurance for you in the event you are sued in conjunction with the performance of your duties relating to your company, if you cause injury to a third party or damage third party property.
Personal accidents can threaten your ability to work. It is therefore reasonable to effectively manage this risk and ensure you have sufficient Personal Accident Cover in place. It makes good business sense.
Assessing your Specific Business Insurance Cover
Insurance packages differ from company to company, sector to sector, and can be tailored to suit your requirements. We recommend that you read our potential liabilities and income security pages for further information.
If you feel you would like some more detailed personal assistance, Kingsbridge Contractor Insurance can provide you with advice and information specific to your circumstances. They offer dedicated professional advice and industry-leading policy limits, protection and key IR35 compliance indicators.