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| CURRENT SECTION :: Insurance | UK's most visited IT Contractor Site - 250k unique visitors March 2008 |
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Every contractor knows they need to take out insurance but many are confused by the vast array of insurance companies, policies and add-ons available. Contractor insurance schemes cover a wide range of professions and each requires a different level of cover. Here, Donna Beanland, scheme manager at Caunce O’Hara which provides a contractor’s insurance scheme, wades through the jargon to explain the types of cover available …. • Professional Indemnity cover If one of your clients suffers a financial loss because of alleged neglect, an error or oversight, professional indemnity insurance will meet the cost of defending claims and any damages payable. This type of insurance should be taken out by any contractor who gives advice or designs and who is seen by their client as an expert. If you were a marketing executive for example and you inserted the wrong telephone number or address into an advert, PI could cover you for loss of sales and damage to your client’s brand. You will usually find that the three policies described below are sold as a single package called ‘business combined’. This package should include public liability, employer’s liability and business equipment. When you take out this policy, make sure you get adequate cover in all three areas. • Public liability You need public liability insurance if members of the public or customers visit your premises, or you go to theirs. This policy covers any awards of damages given to a member of the public because of an injury or damage to their property caused by you or your business. For example, if you were to spill some liquid on a client’s computer, this policy would cover the cost of the damage caused. • Employer liability The Employers Liability Act (1969) means that by law, all companies must have employers liability insurance. If you don’t have it, you are committing a criminal offence. The policy covers a company against its legal liability for loss, damage, injury or disease caused to an employee when they are at work. Even if you are a limited company and are the only director with a 100% shareholding and no employees, you should still seriously consider this policy. If your spouse or partner is an appointed director, they are classed as your employee. If in the future you decided to take on temporary help, this would again make you an employer. Many client contracts will have a substitution clause and you will be breaching the client contract if you don’t take out this cover. • Business equipment cover This will cover your office contents including computers and electronic equipment, furniture, stock, stationary, and documents within your property. Remember that the equipment must be registered to the business rather than you as an individual. You can take this policy out if you work from home or in an office. If you have a lot of expensive equipment, for example if you are a photographer with expensive camera equipment you can extend the amount of cover you take out. • Legal expenses Some contractors assume they won’t need legal expenses insurance but this is actually one of the most important policies you need. This policy will give you legal advice and protection from the costs and expenses of legal actions relating to bodily injury, employment disputes, legal defence, and property protection. If a client brings up a claim against you and it goes to court, this will cover all your costs. At Caunce O’Hara this policy also covers legal expenses for Inland Revenue investigations, VAT disputes and IR35 investigations where businesses have to prove independence as a limited company. We also give clients direct access to an IR35 advice line. • Health and Safety policy This is another policy many contractors don’t bother taking out but by having this you’re showing clients you’ve considered health and safety issues. The policy can be simply bought and downloaded at minimum cost and may go down well with your clients. • Personal accident, sickness and travel You’ll find that different insurers offer very different cover under this policy and the cost of this will vary greatly. Always read the small print to see exactly what you’re getting. This policy would be vital in giving you an income if you became disabled or sick. If you have this policy and are sick or injured, regular payments can be made each week up to a maximum number of weeks as specified by your insurer. A lump sum may also be payable on death or specified disabilities such as a loss of a limb. Always ask exactly what your policy will entitle you to. Don’t go for the minimum Armed with the basics, it’s then important to shop around to ensure you take out the right level of cover from a reputable provider. Don’t just go for the cheapest option - if a policy looks too good to be true, it probably is. Importantly, make sure your policy comes with a helpline where there’s someone on hand to answer any queries. Always find out exactly what your policy covers and what the excess is. When you’ve found a policy and provider that you’re happy with, make sure you keep it updated, remembering to amend it whenever your circumstances change. Previous Page
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