When you take on a job for a client as a contractor in any capacity, whether as a business analyst, engineering consultant, or software developer, it’s important to have coverage to help protect you if something goes wrong.
Contractors insurance is an efficient and safe way to protect your reputation. it also helps ensure you meet an employer’s professional and legal standards, while covering your back if you make any mistakes that could cost your client financially.
recommended coverage types for contractors
There are a few different types of coverage that contractors should consider to protect themselves. More importantly, many employers legally require that you have the correct insurance before you accept a contract and officially begin work on a position or project. Below, we’ll cover the most important types of insurance for contractors.
protect your reputation
Professional indemnity insurance helps protect your business if someone files a lawsuit against you for making a mistake on a job. essentially, it covers the cost of defending your business should you be accused of professional negligence and helps maintain your professional reputation.
A customer claim could be the result of advice of negligence on your part. this could be due to a recommendation you made that resulted in a financial loss.
co-workers and clients
Liability insurance is vital to protect third parties, such as customers. As a contractor, you’ll likely spend a lot of time visiting a customer’s site, which can leave you vulnerable in the event someone has an accident or is injured as a result of the work you’re doing.
Claims can be filed for just about anything, from a spilled drink on the floor causing someone to slip, to accidental damage to your computer equipment. you need to be covered in the event of a simple mistake that could lead to an expensive claim.
protection of confidential data
Cyber insurance is becoming more important for contractors every day. When you store personal data about your clients and projects on computers or in the cloud, you are vulnerable to cyber threats and data risks.
Protecting sensitive data is vital to protecting yourself in the event of a cyber attack. A data breach that exposes customer data or otherwise prevents you from working could be very costly for your business. cyber insurance covers the costs of data restoration and equipment recovery or, in the worst case, the payment of a ransom for data recovery without loss.
other types of coverage to consider
There are a few other types of contractors insurance you should consider getting. each one depends on your personal circumstances:
- Office Insurance: It is worth taking out office insurance to cover the contents of your workplace and computer equipment. this covers you against loss of income or business equipment.
- Legal Fees Insurance: Legal Fees Insurance can be valuable, covering costs related to contract disputes, tax investigations, jury duty assistance, and more.
- employer’s liability insurance – Purchasing employer’s liability insurance is key if you have employees. covers you for claims for injuries and/or illnesses made by employees while they were working for you.
do contractors need employer liability insurance?
Employer’s liability insurance is only required if you hire employees to work for you. If you do all your work as a freelancer, you do not need to take it out, except contractual obligation.
If you want to grow your business in the future and hire employees, this is something to consider.
For more useful information for contractors, check out these articles.
Should I become a contractor?
what is professional liability insurance?
See also: Jewellery insurance – Confused.com