Contractors' Questions: Can I rely on my brolly's basic insurance?
Contractor’s Question: Should I just rely on my new umbrella company to provide me with insurance, as I understand they have to put basic cover in place as a minimum; is that right? The whole point of me ‘going brolly’ was to take away the hassle of having to run my own company, so having to now get independently insured (as I know a few users of the brolly are) seems to defeat the point.
Expert’s Answer: We are not able to definitively answer your question as it is difficult for us to comment on insurers’ policies that might (or might not) be in place as part of an umbrella company’s arrangements, so we therefore cannot provide advice on those.
However, some umbrella companies may stipulate that all employees of the company require their own insurance. You can speak to the umbrella company and see what their insurance policy – if they provide one – will cover. It is likely that you will need professional indemnity insurance and public liability insurance, as a minimum and in most instances.
Professional Indemnity (sometimes simply known as PI), offers protection against negligence in the event that you make a mistake with a client – such as providing advice that leads to a problem. Your client might make a claim against you even if you believe you haven’t made a mistake and a good professional indemnity policy should pay your legal costs and help you defend yourself against the claim.
Public Liability, on the other hand, is there in the event that an accident occurs as a result of something your business has done resulting in a client or member of the public claiming against your business for compensation. Your public liability can be triggered by something as simple as spilling a drink over a client’s computer, or an associate slipping on a wet surface in your office incurring injury or damage.
For both policies, you should check that the amounts they will pay in the event that a claim is made against you will cover you sufficiently (generally, the bigger your client, the higher the amounts you need). If you’re using equipment, that should be insured too. Additional cover such as personal accident protection can also be appropriate.
The expert was Hiscox, a provider of professional indemnity insurance and public liability insurance.