Contract work is differentiated from permanent work in that the individual will be required to provide the service for a short period of time. Contractors may only need to work for a client for a few weeks or months. Today, many people work on a contract basis, with some of the most popular sectors for contractors being the construction and IT sectors.
What Insurance for Contractors Do I Need?
Here are insurance plans you should consider as a contractor:
Employers Liability Insurance
If you have employees, you are required by the government to take out Employers Liability Insurance. This cover will protect your employees in case they get injured while working for you. It will also cover any costs incurred whenever they fall ill.
A Tool Insurance policy will cover the loss, theft, or damage of your tools. Most commonly, the plan is meant to cover hand-held tools and portable electronic equipment. You should note that tool insurance only covers damages that occur because of accidents. For example, flood damage or fire damage will be covered, while wear and tear will not be included.
Business and Office Equipment Insurance
This policy will cover items that are required for the day-to-day running of your business. Some items that are included in the policy are laptops, laser printers, and projectors.
Hired In Plant Insurance
If you need to lease work equipment, tools or machinery, you should take out Hired In Plant Insurance. This policy will cover the loss, theft, or damage of hired items. Any legal costs associated with the damage of the items will also be included in this plan. You can also get Own Plant Insurance in case your own plant items are stolen or damaged.
Contract Works Insurance
This insurance policy is designed to cover any delays or disruptions in the contract work. It can be used for both domestic and commercial sites. Contract Works Insurance will also cover the damage or theft of tools that are required to complete the job.
Other insurance policies you should consider as a contractor include Legal Expenses Insurance and Personal Accident Insurance.
What is Contractor Public Liability Insurance?
As a contractor, you may need to carry out your work on a client’s premises. When working, it is possible for you to damage property or equipment, and you may even cause injury to other parties. To protect yourself from liability, it is essential that you take out contractor Public Liability Insurance. This policy will cover the costs of personal injury or property damage that may have resulted from your actions.
Do Contractors Need Public Liability Insurance?
There are no legal requirements for contractors in the UK to take out Public Liability Insurance, but this cover is extremely useful. Here are some reasons why it is recommended you take up contractor Public Liability Insurance:
- Many clients insist on working with contractors who are adequately insured, and this means you will only get the job if you have Public Liability Insurance.
- If you have employees, they may be responsible for injuries or property damages when providing services, and this will result in a claim against your company. In such cases, a Public Liability Insurance plan will cover the resulting costs.
- The insurer will cover the legal costs required to defend your company whenever claims are made against you.
Are You Liable for Your Contractors?
Contractors can be employed in different ways. If your contractors are recognised as employees of your company, they will be covered under your Employers Liability Insurance. However, if the contractor is self-employed, they will be unlikely to be covered under your company’s insurance. You can determine whether your contractors are legally considered employees by checking for these:
- Employees have long-term or permanent commitments to the company, and they must work on a regular basis.
- Employees are entitled to several legal rights, including annual leave, time off for emergencies, minimum notice periods, and protection against unfair dismissal. Contractors have fewer legal protections. In most cases, the company only has to provide data protection, health, and safety to contractors.
- Employees must work regular hours, and the company has to decide on their place of work. Contractors have more flexibility in the number of hours worked and the tasks they take on.
- Employees earn a salary, which has to be at least minimum wage. With contractors, the pay is set for specific tasks, and the contractors usually need to send invoices for the jobs.
If a contractor can be legally classified as an employee, you will have to cover them in your insurance plan. In case they don’t qualify for your company’s insurance, you should make sure they have their own Public Liability Insurance plan before you hire them.
Why Do Subcontractors Need Public Liability Insurance?
Some contractors have insurance covers for subcontractors, but these plans are usually not sufficient to cover all the risks undertaken by the subcontractor. That is why subcontractors are often required to take out Public Liability Insurance. The contract will usually stipulate the type of insurance cover the subcontractor should have, and failing to take out these insurance plans will prevent the subcontractor from taking the role. The contract will almost always specify that the subcontractor should have Public Liability Insurance. It will also state the indemnity limit that the policy should have.
Does Public Liability Insurance Cover Poor Workmanship?
Public Liability Insurance specifically covers damages and personal injuries resulting from regular business activities. For example, if you accidentally injure a member of the public when delivering the service, the provider of the Public Liability Insurance plan will be liable. Poor workmanship will not be included on the cover.
To cover poor workmanship, you should take out Professional Indemnity Insurance. If a client claims that you made a mistake or were negligent, this insurance plan will cover any resulting costs. These include financial losses arising from faulty designs, negligent advice, and unintentional copyright infringement. The difference here is that Professional Indemnity Insurance is meant to cover costs resulting from professional mistakes or negligence. The plan may also cover any costs incurred in remediation work.