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Whether you injure a client, suffer an injury yourself, or whether a disagreement leads to an accusation of negligence, we know that contractors of all types face professional and personal risks that can be costly.
The best way to ensure a disaster doesn’t leave you with career-ending compensation costs is to take out a comprehensive contractor insurance policy. And it’s our business to help you protect your business, so we can start by pointing you in the direction of the most important insurance for a contractor.
There are some types of insurance it’s sensible for every contractor to have, such as professional indemnity and public liability insurance. But you can tailor your policy to any type of contracting profession or business activity to guarantee you’re protected for the risks posed by your specific circumstances.
Read on to discover which types of insurance cover you need as a contractor, the factors that affect your monthly premium, and how to find your perfect policy.
What is contractor insurance?
Contractor insurance encompasses a variety of types of insurance that can protect anyone from a plumber to an IT contractor from the financial costs of dealing with legal proceedings and compensation payouts, replacing lost, stolen or damaged goods, or being unable to work.
Every contractor is different and faces different risks, but including the following in your policy is a good place to start.
Contractors all risk insurance
As the name suggests, contractors all risk insurance is designed to cover all the risks you would normally expect to face during a construction project as a building contractor.
As standard, it usually includes contract works insurance – which protects against events that interrupt the progress of your work – hired in plant cover, own plant cover, and tools insurance. It can be tailored to particularly hazardous or risky work.
Professional indemnity insurance for contractors
Many contractors are in the business of offering expert advice and services to clients. This could be in the form of IT security analysis, accounting services, or construction site management.
Whatever you do, if you make a mistake or give incorrect advice that leads a client to suffer professional or financial loss, you could be liable.
If a customer accuses you of being negligent or losing them money and takes you to court because of it, professional indemnity insurance will kick in to cover your legal and compensation costs.
Contractors public liability insurance
If your work has you dealing with members of the public, then you should consider including public liability insurance in your policy.
This is a type of business insurance which covers you in the event that a member of the public suffers an injury or has their property damaged as a result of your business operations.
For example, say you’re a tiling contractor repairing a leaking roof, and a dislodged tile falls. Whether that tile lands on a client’s head or their car, contractors public liability insurance will have you covered for legal fees and damages.
Other types of insurance for contractors
If you employ any other staff, whether part-time or full-time, then you’re legally obliged to have employers’ liability insurance or face a £2,500 fine per employee for every day they’re not insured.
If you’re a trade or construction contractor, then it’s more than likely you have expensive tools and equipment to protect. If you don’t plan on covering these under all risk contractor insurance, then you can take out separate tools, equipment, hired in plant or own plant cover according to your needs.
Finally, contract works insurance can be a great addition to your policy if there’s a risk of a disaster such as a fire or flood or even vandalism destroying, disrupting or delaying your work. Likewise, personal accident insurance can be a big help if an injury prevents you from working for any length of time.
You may also want to consider business buildings and contents insurance and cyber and data insurance depending on your needs.
Do I need contractor insurance?
If you employ anyone, then employers’ liability insurance is the only insurance you’re legally required to have. If you run a small business with no employees, then insurance isn’t legally mandated.
However, clients may refuse to work with you unless you have certain insurance policies in place. So, even if you’re willing to risk the possibility of an accident or disaster without the protection of insurance, you might not even be able to find any work.
What does contractor insurance cover?
Contractor insurance could include all or some of the following:
- Contractors all risk insurance
- Professional indemnity insurance
- Public liability insurance
- Employers’ liability insurance
- Tools and equipment insurance
- Hired in plant or own plant insurance
- Contract works insurance
- Personal accident insurance
- Business buildings insurance
- Business contents insurance
- Cyber and data insurance
» MORE: Compare Business Insurance
What isn’t usually included in contractor insurance?
The needs of contractors are so varied that no two contractor insurance policies will look the same.
Your insurance provider should be pretty flexible about what can be added to your policy, so make sure to talk to them about your requirements and the specific risks you face. They should be able to help create a policy that’s tailored to the needs of your business.
How much does contractor insurance cost?
The main factors that affect the cost of your contractor insurance policy are the type of covers included, the length of time you’ve been in business, the number of employees you have, and the specific risk profile of your profession.
For example, if you have 10 employees, you’ll likely need a higher coverage limit for your employers’ liability insurance than someone with just one or two employees. Likewise, if your contracting work frequently brings you into contact with the public, then you’ll probably need a higher public liability coverage limit than someone who works alone at home all day.
Contractor insurance FAQs
Most contractors should consider professional indemnity insurance and public liability insurance to provide some protection in case things go wrong with a client or a member of the public. Equipment insurance, meanwhile, will protect your valuable tools.
If you work in construction, contractors all risk insurance is a great idea. It includes contract works, which covers you if an incident interrupts your ability to work, hired in plant cover, own plant cover, and tools insurance
Legally speaking, the only policy you’re absolutely 100% required to take out is employers’ liability insurance – and even then, that’s only if your business employs anyone in the UK who isn’t a close family member.
However, rather than asking yourself what insurance you legally need, try asking yourself whether your business could afford to pick up the pieces if the worst were to happen. In most cases, extensive contractor insurance is likely to be a very good idea, protecting your business from the financial costs of a disaster.
Self-employed contractors don’t legally need insurance unless they employ anyone, but it’s a good idea to protect yourself from the financial consequences of a claim against your business, or loss, theft or damage, with a contractor insurance policy.
Public liability insurance is a good idea for all contractors, especially those whose work poses a risk to the public or their property.
Yes, if you employ any subcontractors, they should be covered for accidents, injuries, and damage to their property by your public liability insurance. You should still make sure that your policy covers subcontractors, and that they also have their own insurance.
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