There are three main types of insurance that a Contractor should consider:
Public liability insurance
This covers physical damage or harm done by the contractor whilst representing their business. This is a legal requirement – and contracts generally require £5m cover. This might cost £200 or so;
Employer’s liability insurance
This is no longer a legal necessity if the only worker in the Company is the director/shareholder, but it is required if there is an employee. It is inexpensive and is often included within the cost of the Public liability insurance;
Professional Indemnity insurance
This is generally the most expensive type of insurance and its cost varies greatly depending on the amount of cover required. It insures against claims of professional negligence against the Contractor. It is not a legal necessity but is virtually always a contract requirement. Contracts generally ask for £100,000 cover or a £1m or, very commonly, “adequate” Professional indemnity insurance cover – which leaves it open to interpretation. Kingsbridge Contractor Insurance provide a combined insurance package and we regularly introduce our clients to them.
Fee protection insurance
One other type of insurance that Contractors often consider is insurance to cover accountancy and legal fees incurred in dealing with HM Revenue & Customs investigations into a Contractor’s IR35 status or other tax issues. These policies might typically cost £75 to £100.