20-10-2008
Essential cover for contractors
by Adfero
Self-employed contractors need to have numerous forms of business insurance in place to protect themselves and their business from outside claims.
Public liability insurance forms the basis of most business insurance policies as almost all trades deal with external clients or members of the public in their day-to-day activity. Public liability claims can run into the thousands and so without insurance cover a business would be extremely financially vulnerable.
In the current economic downturn, contractors cannot afford to be risking claims against them. With an increasing number of legal firms now offering a no win, no fee service, Simply Business suggests that all self-employed tradesmen and professionals should have cover in place to protect them from compensation and damages claims.
Public liability insurance would cover a contractor for claims if, as a result of their business activity, injury or death is caused to a person or damage is caused to their property.
If you have a contracting firm and employ staff, even on a casual basis, you must hold Employers’ Liability insurance by law. This insurance covers your business for most claims arising from employee issues, including illness or death in service.
As long as a business employs at least one member of staff, then this protection has to be in place to afford employees with cover to a minimum level of £5 million.
Having this form of insurance in place means a business can, in the event of an incident where the business is to blame, afford to pay out compensation without infringing upon other aspects of its financial stability.
Trade contractors, such as builders, plumbers, electricians and other specialists should think about insuring their tools as these are essential to running the business.
The value of a contractor’s tools can be high and many pieces of equipment take time and are considerably expensive to replace. If they were lost, stolen or damaged this could cause the business to lose out on income. Although for a self-employed contractor insuring these items may seem like more of an expense at the outset, in the long-term Tools Cover is a sensible business decision.
Trade contractors are also likely to own a business van or other vehicle. In this case it is important to have special insurance for commercial vehicles, as a regular car insurance policy will not offer sufficient cover.
Van insurance can be tailored to a business' needs. For example if a small business has a fleet of vehicles then it will need more complex cover, while Goods in Transit can be useful for those vehicles that carry tools, equipment or stock.
Professional contractors may have other concerns such as protecting mobile business equipment. Laptops, PDAs etc. that are regularly taken to client sites are at risk from being lost or stolen. If this happens, business contents cover can help replace this vital equipment so the business does not lose out.
Professionals such as architects, project managers, IT contractors and many more also take out Professional Indemnity Insurance. Any work done on behalf of a client, or advice given, could impact negatively on their business if mistakes are made or negligence can be proven. In this situation Professional Indemnity would cover a contractor for financial claims made against them.
Speaking to The Journal, Joanne McCreedy, an advisor for Business Link, said that all businesses should have some form of insurance in place.
