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Understanding contractor’s insurance

Nov 2018 General | Comments Off on Understanding contractor’s insurance
Understanding contractor’s insurance

As a contractor, it pays to understand your individual insurance needs. When looking at what’s on offer for contractor’s insurance it can often be confusing, with different policies seemingly doing very similar things. Jelf account executive Scott Wright looks at choosing the right cover for your needs

Keeping things simple

Three fundamental types of cover make up a standard contractor’s insurance programme: Public Liability, Products Liability and Professional Indemnity. The combination of these key covers will protect you and your business from the majority of claims you’re likely to face.

Public Liability

Public Liability means that you are covered in the event of you causing injury through negligence to a member of the public (a third party person) or for any damage caused to property not belonging to you. This includes cover for:

  • Injury
  • If someone makes a claim for slips, trips or falls

  • Accidental damage
  • To third party property if you are liable

  • Legal cover
  • Covering the costs of courts or solicitors

    Products Liability

    Products Liability covers you in the event of injury or third party property damage as a result of products that were sold, recommended or installed by you. Products Liability is usually covered combined with Public Liability.

    Professional Indemnity

    Professional Indemnity insurance protects you in the event of financial losses caused by defective design work or improper advice, regarded as professional negligence.

    Without the correct insurance in place, you could find yourself liable for any number of financial costs in the event of an insurance claim. However, it’s not just financial losses you should be concerned about.

    If claims for damage or injury are not dealt with in a timely fashion, or if the client pursues further legal action to counter their losses, your business reputation could also be at risk.

    Other elements of cover to consider

    Despite having the above elements of cover, there could still be gaps in your insurance, leaving you open to threats that could affect your business.

    And while the above will work to protect you and your business against common exposures, there are still certain, less considered risks that your standard insurance won’t cover. Remember, every business is different. In order to be protected from possible claims, your insurance must be tailored to your particular business needs.

    Additional policy covers

    Take a look at these additional policy options, and consider whether your business might require more specialised cover.

  • Employers’ Liability Insurance
  • For any contractor this insurance is a statutory requirement if you employ even a single person, or even have volunteers help you out from time to time. Employers’ Liability provides up to £10,000,000 indemnity to cover your employees for accident or injury while at work. For larger businesses, higher limits can be arranged.

  • Office Contents and Computers
  • Not all contractor’s insurance policies include cover for your office equipment. The costs of damage to your office equipment in the event of fire, flood or break-in could make a big financial dent. This option isn’t a huge expense and covers everything from furnishings and carpets to computers and other electrical equipment.

  • Cyber Insurance and Crime
  • Cyber Insurance covers a number of increasing risks in today’s climate, insuring you in respect of your legal liability arising from a range of incidents, from a loss of data to the costs associated with hacking. A Crime policy will also provide cover for incidents such as social engineering scams; giving you additional protection should you be a victim of electronic monetary theft, or incur costs due to targeted fraud.

  • Increased Cost of Working
  • Increased Cost of Working is a type of Business Interruption cover, paying out in the event of property damage (including fire and flooding) that has an immediate effect on your business revenue. Under this policy, your provider will cover the costs of rent for temporary office space, overtime costs and even ‘business as usual’ advertising, allowing you to keep your business running with minimal disruption.

  • Directors’ and Officers’ Liability
  • This specialist liability cover protects individuals for claims made against them personally, for alleged wrongful acts such as breach of trust, breach of duty, negligence or defamation, while serving on a board of directors/as a company officer within a named business.

  • Excess Layer Public and Products Liability
  • If you work with councils, schools or hospitals you may be asked to provide indemnity limits in excess of the limit provided by your standard policy. Equally, you may find yourself working in locations where a higher limit of indemnity would be prudent. Even if it hasn’t been requested by your client or main contractor, it is worth protecting your business in the event of an incident that leads to a large claim, ie a fire in a shopping centre caused by an overloaded cable could easily eat up a £2m or even £5m limit of indemnity.

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