You’ve just left your old company and gone it alone. Finally, you are free and in charge of your own business – and that business is you. But before you start building that business you need to make sure that the foundations are solid and protect it against any rainy days that might turn up unexpectedly at some point in the future. When you worked as a permanent employee for a large firm you would have had all those protections built into your employment – sick pay, maternity pay, pensions etc. And if anyone decided to sue the company, it would not have affected you personally. As a contractor, things are different. You are responsible for your own admin, your own tax, pension and sick cover and most importantly, your own insurance to cover yourself when things go wrong. And this is why one of the first things any new contractor should do is make sure he or she has the right insurance in place. Which insurance should you get? There are three main types of insurance that all contractors need to look into – employers liability insurance, professional indemnity insurance and public liability insurance. In this article, we will explore public liability insurance.
What Exactly Is Public Liability Insurance For Contractors?
Public liability insurance is a type of insurance that covers you and your company for a wide range of scenarios in which someone, or something, becomes injured or gets damaged because of you or your business and you are then held responsible. If your business interacts with the public (including other businesses and clients) in any way (which of course it will) then you need to seriously think about purchasing public liability cover. If you visit clients at their place of business or if you have clients come to your office or to your home office then you will need it. You might have clients come and visit you who trip over some storage boxes you have lying around and get injured. Or you might do some work at their premises and break some of their equipment accidentally. In both cases, public liability will have you covered. This applies to contractors across all fields. Say you are an IT contractor who installs software on site for clients. You might drop your coffee on one of their computers and cause some serious damage. Or you could be a website designer who works from a small office and you invite a client to come to the office and the same thing happens. In these and hundreds of other scenarios, public liability insurance will have you covered.
Is it Mandatory? Do I Really Need Public Liability Insurance?
Of the three insurance types mentioned above, only Employers Liability Insurance is legally required (if you have more than one employee.) But that’s not to say you shouldn’t still view it as essential. Indeed, many professional bodies (such as in law, accountancy or architecture) will insist you have it before issuing you with their accreditation. And you will very quickly find that every major client who you want to work with will probably have a clause in their contract that insists you are covered by both professional liability insurance and public liability insurance. Additionally, even if all your clients don’t insist on it, it just looks more professional to have it. And the most important reason of all? This is your business and your livelihood. You might never put a foot wrong but you can’t control other people. If someone claims against you, either with good reason or frivolously, it could end up costing so much as to put you out of business and in debt. Why not pay a small amount just to have that peace of mind that you are covered? And one final point – if your business does grow and you take on staff, you will need public liability insurance to cover their actions too, in case they cause someone to sue your company.
Are There Any Advantages To Getting Public Liability Insurance For Contractors?
There sure are. As mentioned above, you will inevitably come across contracts that have a clause requiring you to be covered adequately by insurance. Having it already in place means you will never miss out on contracts and will add that extra sheen of professionalism to your business.
Do I Need Both Public Liability Insurance and Professional Indemnity Insurance?
Yup. Both do different things and both are equally important. Professional Indemnity insurance covers you against claims made relating to advice you gave or a service you provided whereas public liability is all about injury to the person or to property. However, most insurance companies offer very good combined rates to contractors signing up to both types of insurance in one package.
What Amount of Insurance Should I Get?
This depends on a number of factors such as the industry you work in, the type of work you do and the requirements of the agencies or clients you work for but as a rule the basic contractor cover sits at around £10 million for professional indemnity insurance and £1 million for public liability.
What Should I Look At When Comparing Providers?
Firstly, that they offer the base level of cover that was just discussed but preferably that they can offer more than that – either £5 or £10 million for public liability. And secondly that they can do a deal and bundle the two (or three) main insurance types together for a decent price compared to buying them as stand alone products.