Why contractors need insurance

It is no news that most people dislike having to buy insurance for just about anything, until they need it. Most contractor insurances are not statutory obligations, with the exception of Employer’s Liability Insurance given that there is anyone other than yourself employed to the company, so many will consider continuing their contracting careers with an uninsured business.

Insurance is a world of ifs and buts, however a contractor undoubtedly works with a great deal of financial risk and has a variety of responsibilities and obligations which can put the business at further risk still.

Your client can take legal action against you if they believe you have caused them a financial loss due to your error or negligence and an agency contract is unlikely to protect you in this event. It is not a secret that these cases are uncommon but they can be incredibly costly when they do occur. Professional Indemnity Insurance is there to cover the costs of such an event and is not only a basic business insurance but an indication of your status as a genuine business for IR35 purposes.

Your business is also liable for any damage to a third party’s property or death/injury to a third party person. Should an accident happen, the costs of such a case and any compensation payable can be staggering. Public Liability Insurance is there to cover these costs.

Alongside the basic business insurances, there are a number of other potential mishaps such as falling ill long term, any number of legal disputes such as contractual, or damage to your business premises, with a policy available for any of them.

If you are still not convinced that you need any business insurance, consider then that most contracts stipulate that the supplier must hold Professional Indemnity Insurance and often Public and Employer’s Liability Insurance in order to undertake the contract. Furthermore, if these policies are a contractual obligation and you still do not obtain them, in an IR35 investigation HMRC may take the assumption that nothing else in the written contract is a true reflection on your real working circumstances.

Insurance companies are often viewed as the big bad wolves out to empty the pockets of the gullible and the fearing. With a history of some quite hilarious insurances that have been created and stories of impossible-to-claim policies, there may be some merit in this, at least in the past.

At Qdos Contractor however, all of our policies have a genuine use to contractors and all of our terms and conditions are available to read online before you purchase the policy, or you can speak with one of our representatives who will help you through it. We do not use sales tactics but are here to help, it is up to you to make your own decision on whether a policy is right for you or not, and we give you a 14 days cancellation window, fully refundable and without charge, just in case you make a mistake.