Is insurance required if you are not in a contract? Is insurance required if you are not in a contract?
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  1. #1

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    Default Is insurance required if you are not in a contract?

    Hi,

    I've been without a contract for a couple of months and I think I'll be without another for some more. I was about to renew my company insurances (professional indemnity, professional liability and employer's liability), but do I need to if I am not contracting at the moment?
    I've reviewed my last contracts and they don't mention that I should keep it for a period after the contract as ended, plus the job I did was not carried forward by the client.

    Or is it better to cancel the policies now and retake them whenever I start contracting again?

    Thank you

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    It's possible a client might find something after you've gone and if you've cancelled your cover you are stuffed.

    I expect there will be a charge to cancel and they are so cheap you'll only be saving a few 10s of pounds per month.

    I wouldn't bother... In fact I don't.
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    Depends entirely on your attitude to risk. Claims are made on an "arising" basis. So if you are without insurance at the time of the claim, it matters not that you had insurance during the job. Not at all.

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    Quote Originally Posted by Fred Bloggs View Post
    Depends entirely on your attitude to risk. Claims are made on an "arising" basis. So if you are without insurance at the time of the claim, it matters not that you had insurance during the job. Not at all.
    Bit of a scam really. I remember being somewhat unimpressed when I discovered the PCG operated the same way.

    Of course limited liability protects you if it were to happen. So perhaps one of the factors is how much money you have in the company.
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    Quote Originally Posted by VectraMan View Post
    Bit of a scam really. I remember being somewhat unimpressed when I discovered the PCG operated the same way.
    Not really. You wouldn't want to take on someone who was immediately going to stiff you with the costs of a case that you had no means of avoiding, or to carry an unlimited liability after they had left, would you? PI cover can be backdated, but not if you are being sued already.

    Of course limited liability protects you if it were to happen. So perhaps one of the factors is how much money you have in the company.
    No it doesn't, although it will help, since it depends on what you are charged with doing. The initial court appearance will take up a few tens of thousands for anything other than blatant incompetence and that is what 90% of your PI is covering.
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    Check with your insurer but you'll probably find you need to maintain continuity of insurance, particularly for professional indemnity insurance, to be covered for historical claims. I know QDOS required this (I missed a renewal by one day years ago so they will no longer cover me prior to this date even though I had a policy in place for all but one day).

    Your contract status has no bearing on your employers liability. Either you need it or you don't. If you're a sole director you don't. If you employ somebody, you do.

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    Quote Originally Posted by malvolio View Post
    Not really. You wouldn't want to take on someone who was immediately going to stiff you with the costs of a case that you had no means of avoiding, or to carry an unlimited liability after they had left, would you? PI cover can be backdated, but not if you are being sued already.
    If I sell a car I don't need to keep insuring it in case there are any accidents that haven't been claimed for yet, and the same would be true of home or most other insurance. It's entirely reasonable to think that if you pay the money for liability insurance for a 6 month contract then you're insured for anything that happens because of that contract. If the same trick was being used with a consumer product it'd be on Watchdog in no time.
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    Quote Originally Posted by VectraMan View Post
    If I sell a car I don't need to keep insuring it in case there are any accidents that haven't been claimed for yet, and the same would be true of home or most other insurance. It's entirely reasonable to think that if you pay the money for liability insurance for a 6 month contract then you're insured for anything that happens because of that contract. If the same trick was being used with a consumer product it'd be on Watchdog in no time.
    I don't think you can compare using those analogies. They are different beasts so not a good example. I sued a solicitor 13 years after they cocked up a house sale and their PI paid up so it can happen at anytime.
    Last edited by northernladuk; 11th October 2016 at 13:37.
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    Quote Originally Posted by VectraMan View Post
    If I sell a car I don't need to keep insuring it in case there are any accidents that haven't been claimed for yet, and the same would be true of home or most other insurance. It's entirely reasonable to think that if you pay the money for liability insurance for a 6 month contract then you're insured for anything that happens because of that contract. If the same trick was being used with a consumer product it'd be on Watchdog in no time.
    That's fine if you can be certain your liabilities end with the contract but how often is that actually the case?

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    Quote Originally Posted by northernladuk View Post
    I don't think you can compare using those analogies. They are different beasts so not a good example. I sued a solicitor 13 years after they cocked up a house sale and their PI paid up so it can happen at anytime.
    It's exactly the same. If the solicitors insurance covered the house sale it should be irrelevant when you sue; he was covered for that sale. If I hit a parked car and the owner doesn't notice for 3 weeks, it doesn't matter that my insurance has expired by then. It's when the incident occurred that counts. After I'd taken a permie job I phoned up the PCG to cancel and they told me I should keep paying, probably for another 6 years (I didn't). I'm certain I'm not the only one. You can imagine newbie contractor takes a 3 month gig and then goes permie, gets stuck with 7 years membership to cover 3 months. Reasonable? If that happened in any personal insurance Anne Robinson would be having a meltdown.

    How long does everybody plan to keep their insurance in place? 6 years after you retire? 20? Is death the end or do you expect your family to keep the insurance going in case your estate is sued because you missed out a semi-colon in 1997?
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