Contractor insurance is essential for protecting your business against unexpected issues, such as errors in your work causing financial loss to your client, or personal injury claims from third parties and employees. If a claim is made against you, even if you believe it to be untrue, and you don’t have the right insurance in place, you could face substantial legal fees and compensation payments.
This is why it’s important to ensure you have the right insurance policy in place, with a suitable level of cover for your unique business needs. In this guide, Markel Direct explains the different types of business insurance you can include in your contractor insurance policy and how they can help to protect your business.
This guide will cover:
Professional indemnity insurance
Often considered the most important type of insurance cover for contractors, professional indemnity insurance protects you from claims of mistakes in your professional services, advice or designs. Many clients will require you to have this insurance before you can start working for them.
If a claim of this kind is made against you, professional indemnity insurance could pay your legal defence costs and expenses, plus any compensation you may be responsible for paying.
As well as professional negligence, professional indemnity insurance can also cover:
- Unintentional breach of confidentiality
- Unintentional breach of copyright
- Defamation and libel
- Loss of documents or data
- Loss of money or goods (for which you are responsible)
Professional indemnity insurance could help in the following scenarios:
- A project is delayed due to an error you made during planning, leading to a claim from your client for incurred costs.
- You recommend software to a client that fails to deliver the expected improvements, prompting legal action for compensation.
- You are hired to develop software for a large business and later go on to contract for a competing firm and reuse parts of the code. The client takes legal action against you.
- A copyright licensing agency fines you for using an image on your website without a valid licence.
Markel Direct provides professional indemnity insurance with limits ranging from £50,000 to £5 million.
Markel Direct – Professional Indemnity Insurance (£50k to £5m cover)
Public liability insurance
Public liability insurance covers you against claims of injury to someone (including clients, visitors or suppliers) or accidental damage to third-party property, as a result of your business activities. If you are working or visiting your client's office, they will often require you to have this insurance.
Here are some public liability insurance claim examples:
- A fellow contractor trips over your laptop cable, breaks their wrist and is unable to work, leading to a claim for lost income.
- While working at a client's office, you accidentally spill coffee on an expensive laptop, resulting in a claim for replacement costs.
Public liability insurance can cover your legal defence costs if a claim of this kind is made against you, as well as any compensation costs you may be responsible for paying to the claimant.
Public liability insurance from Markel Direct also includes product liability insurance with cover limits varying from £1 million to £5 million.
Legal expenses insurance
Legal expenses insurance offers comprehensive protection for businesses against various legal costs. This includes contract disputes, such as recovering debts owed by clients, tax enquiries, including IR35, and employment disputes with former employees.
Legal expenses insurance covers the cost of pursuing or defending against these legal actions, for example:
- A contract dispute over unpaid fees – after completing a project for a client, they refuse to pay the final payment. You wish to take legal action against the client, so a solicitor is appointed, through your legal expenses insurance, to issue court proceedings and recover the outstanding payment.
- HMRC tax enquiry – HMRC notice some discrepancies in your business regarding your declared income. Your legal expenses insurance covers the cost of legal representation, helping to defend your business during the tax enquiry.
The likelihood of having a dispute with another party — be it a client, supplier, or employee — is considerable. For this reason, safeguarding your business with legal expenses insurance could prove to be highly beneficial.
Get a quote for legal expenses insurance in just 90 seconds here.
Get a Quote for Legal Expenses Insurance in 90 Seconds
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Portable equipment insurance
If your job involves using your work equipment outside of your office or home, for example travelling to a client’s office with your laptop, you may wish to consider portable equipment insurance.
Portable equipment insurance provides cover for work devices or tools that are used outside of the office against theft and accidental damage or loss. Your portable equipment might include a laptop, iPad, phone, camera, portable Wi-Fi hub or a wireless charging mat.
If your portable equipment were to be stolen or accidentally damaged, this insurance could cover the costs of repairing or replacing your portable equipment.
Below are examples of portable equipment insurance claims:
- You are travelling by train to visit a client at their offices and accidentally leave your laptop bag behind on the train. You contact the trainline but they are unable to find the laptop bag. Your portable equipment insurance covers the cost of replacing your laptop.
- You have travelled to attend an industry conference. During the day, you need to take a client call and walk around the nearby area as you speak to the client. Your work phone is snatched from your hand and stolen, but thanks to the payout from your insurance claim, you are able to swiftly buy a replacement.
Markel Direct can provide up to £20,000 of portable equipment cover.
Building and contents insurance
Buildings and contents insurance protects office premises against accidental damage, including theft and damage caused by disasters such as fire, flood, explosion or storm. It covers office buildings, office contents and computer equipment.
If your premises and contents are damaged, your business could be left facing significant challenges which is why buildings and contents insurance is important to consider.
Buildings and contents insurance claims examples include:
- A water main bursting overnight and flooding your office. You claim for repairing the water damage caused to the walls and floor in the building, as well as replacing the computers that have been left unusable.
- An intruder breaks into your secure office while you’re on holiday and steals several laptops and docking stations. You claim for the costs of replacing the stolen laptops and docking stations.
Building and contents insurance from Markel Direct is not available for homeworkers, however, home office contents can be covered.
Business interruption insurance
Business interruption insurance can cover loss of income or increased operating expenses incurred if you are unable to work from your primary business premises.
This insurance cover can mitigate financial losses by compensating for the costs associated with relocation during repairs to your office or if you are unable to meet contractual obligations.
For example:
- Your office is flooded due to a burst pipe in the floor above and your computer equipment is left damaged. It needs to be taken in for repairs which results in you losing access to key client files and systems for 10 days. Business interruption insurance may cover the lost income during this period.
- A fire at your shared office damages the building and prevents you from accessing the office for two weeks. Your business interruption insurance covers the cost of a temporary office relocation.
Business interruption insurance from Markel Direct can provide up to £100,000 of cover.
Occupational personal accident insurance
If a work-related injury prevents you from working, occupational personal accident insurance can provide a weekly benefit or a lump sum to support your income.
Here are some examples of where occupational accident insurance might help:
- On your way to a client meeting, you slip on some ice and fracture your wrist. You are left unable to type or use a mouse for a month. Occupational accident insurance pays a weekly benefit during this period to help cover lost income.
- During your morning commute to the office, you are hit by a car and knocked off your bike. The accident leaves you with life-changing injuries that eventually require you to wear a prosthetic leg and learn how to walk again. Your occupational personal accident insurance pays out a lump sum.
Get a quick quote from Markel Direct for occupational personal accident insurance.
Cyber insurance
Cyber insurance safeguards your business by covering expenses related to managing and recovering from cyber-attacks or hacking threats.
As a contractor running your own business, you are responsible for implementing measures to protect your cyber security, but as attacks become more sophisticated, cyber security becomes increasingly difficult.
If you are the victim of a cyber-attack that compromises your computer systems and client data, the impact could be devastating for your business.
To demonstrate how cyber insurance can help, here are some claim examples:
- You accidentally open a phishing email which triggers ransomware, encrypting all of your local and cloud-based client files. The attacker threatens to leak sensitive data and requests £10,000. Cyber insurance helps to meet the ransom demands and cover the breach notification costs.
- A plugin you have used contains malicious code and downloads malware onto your laptop. Your laptop becomes unusable and needs fixing. Your cyber insurance covers the cost of restoring the laptop.
Markel Direct provides cyber insurance with limits ranging from £50,000 up to £250,000.
Directors and officers insurance
Company directors and officers can be personally liable for poor decisions, mismanagement and other breaches of the Companies Act, regardless of their intentions.
If a claim of this kind is made against you, directors and officers insurance can pay defence and compensation payments.
To help demonstrate this, here are some claim scenarios:
- An employee makes a claim against you in your capacity as a company director, accusing you of discrimination and wrongful dismissal. Directors and officers insurance covers the legal costs to defend you and settlement fees.
- A shareholder alleges that as a director, you have made poor decisions that have negatively impacted the company’s profitability. Your directors and officers insurance covers the cost of your legal defence.
Employers’ liability insurance
Employers’ liability insurance protects you against claims of injury or illness suffered by employees due to their employment with you. Legally, every business with employees must hold a minimum of £5 million in coverage.
Employers’ liability claim examples include:
- An employee slipping on a wet floor at your office and injuring themselves, leading to a personal injury claim.
- An employee tripping over a cable in the office and being left unable to work due to the injury, resulting in legal action for compensation.
In both cases, employers’ liability insurance would pay your legal defence costs and any compensation you are legally liable to pay.
Employers’ liability insurance from Markel Direct provides £10 million of cover, as standard.
To find out more
To find out more about contractor insurance or to get a quick quote, visit the Markel Direct website.