Whether your business is building houses or IT consultancy if you are a contractor you have a responsibility to your clients and yourself to adequately protect your business with contractor insurance. Most small business insurers should be able to offer a suitable business insurance package for contractors, but with the needs of each contractor potentially differing substantially, it pays to start your search for a suitable insurer armed with the answers to a few simple questions.
Which types of insurance will I need?
If you are new to the business you may be unsure of the types of insurance you need to take out. Some types of insurance you are required by law to hold, others will set the minds of potential clients at ease and help you win business.
Public liability falls into the former category and will protect you should a member of the public decide to claim against you for accidental damage to the self or their property, which has occurred on your premises or as a result of your business activity. If you have a high volume of visitors to your business premises then you are likely to need a higher level of insurance, if as a contractor you don’t use premises for business, you may find you have a lesser burden.
Other types of insurance you are likely to need are buildings insurance and insurance for plants, tools, and equipment. Professional indemnity insurance is often sought by contractors, sometimes out of legal obligation and also as peace of mind for potential business partners. It covers against claims of damage brought as a result of your business services, activities, and advice. So, should an IT consultant unwittingly unleash a computer virus on a client’s computer network, professional indemnity insurance would protect against the claim?
What should my cover be set at?
Certain minimum insurance levels in the UK are set by law and it’s worth checking out the government website for more advice on this. Where there isn’t a minimum you need to realistically consider the impact of a claim on your business. Setting excesses high to save you cash on your premiums will prove to be a false economy that could sink your business if you don’t have the cash flow when problems hit. That said, you certainly don’t want to be paying for cover you don’t need.
Can I afford to pay all at once?
Many insurers offer the option to pay by quarterly or monthly installments, though there may be a charge for this practice. Consider whether you could afford to pay in bulk to save cash.
What can I do without?
Unfortunately, there are very few insurances small businesses can go without. If you are truly a one-man band, you will have the luxury of avoiding employer liability insurance, but if you employ even one member of staff on a part-time business it becomes a legal requirement. Assessing your insurance needs regularly is the key to ensuring adequate and affordable cover.
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