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If you’re self-employed as a contractor or you run a contracting business, you’ll be focused on delivering over and above your client’s expectations.

As careful and professional as you may be, accidents can happen and having the right insurance is vital to maintaining relationships with your clients and keeping your great reputation.


If you’re self-employed as a contractor or you run a contracting business, you’ll be focused on delivering over and above your client’s expectations.

As careful and professional as you may be, accidents can happen and having the right insurance is vital to maintaining relationships with your clients and keeping your great reputation.


Emily Kindness
From the Business team
minute read
Do you know someone who could benefit from this article?
Posted 5 NOVEMBER 2021

Why is contractor insurance needed?

Working as a contractor is filled with risks. No matter how professional you are, some things can be out of your control and contractor insurance acts as a safety net to protect you for things like: 

  • Accidental damage – as a contractor, you’ll probably be travelling between lots of different places for work. If you’re working in a trade, accidents can happen which lead to property or possessions being damaged. Contractor insurance can protect you against the cost of a claim being made against you for compensation.
  • Accidental injury – similarly to accidental damage, if you’re a contractor who works with powerful tools and equipment, you may be held responsible for an accidental injury. The right policy can protect you against compensation claims.
  • Technical problems – if you work in IT you could be held responsible for any systems failures caused by your work, or you could be responsible for a data leak after having your laptop stolen.
  • Loss of earnings – it’s not just about damages and injury you may cause to others. If you’re injured and unable to work, contractor insurance could help you claim for loss of earnings.

Is contactor insurance a legal requirement? 

No, it’s not a legal requirement to have contractor insurance. However, some clients may ask for proof of your insurance, before they agree to work with you. This makes having contractors insurance a good idea. It also offers peace of mind as a safety net, knowing that you’re protected, should something go wrong.

What types of contractor insurance are available? 

Exactly what types and levels of insurance you need depends on what type of contractor you are as well as what type of contract skills you are delivering. 

In general terms though, you need to cover yourself and your business against claims that might arise against you and your work. 

To start with, there are three different types of liability insurance for you to think about.

Public liability insurance

If you work anywhere that you may come into contact with the public or clients directly you should consider public liability cover. Public liability insurance provides protection against third party property damage or injury as a result of your negligence at work. It won’t cover you, however, for your faulty workmanship. For example if you are working at a site using your laptop and a member of the public or client, trips over the wire and hurts themselves this could cover you against any potential claims for personal injury damages.

Employers liability insurance

The next liability type is employers’ liability insurance. This is a compulsory form of insurance for any business that has employees, including labour only sub-contractors, under their direction, control supervision or that supplies tools or materials to. Employer’s liability provides cover for negligence claims against you should your staff get injured or become ill due to their work and hold you responsible.

Professional indemnity insurance

The third type of liability insurance you may want to get in place as a contractor is professional indemnity insurance (PI). It provides cover for the cost of defending damages or compensation claims that are made against you by your clients for errors and omissions, which arise out of breach of your professional duties when giving advice or providing design.

For example, if you’ve been employed as an IT contractor for a software implementation project and the project fails to function due to your design or training, you could be held liable. If an angry client decides to sue you or your small company for negligence, the bills could be crippling. PI insurance could cover the legal costs and any associated damages.

Alternatively, if you’re hired to offer advice, for example an accountant or a HR professional, it’s important to consider what happens if your advice is wrong. Worst case, your client might sue you. A PI policy could cover you for defending action brought against you.

How can I reduce the risk of a claim against me as a contractor? 

Your first step should be to try and limit problems in the first place. We know this sounds obvious but we also know that mistakes do happen. There might be some things you can do in your business that help to reduce the risk of legal action. 

As a contractor:

Always check the contract
Don’t be put off by long and complicated contracts: read every clause and make sure you’re happy. Don’t sign it if you’re not. Keep copies of all your contracts.

Make sure deliverables are clear
Some projects might start with deliverables that are unclear. As a contractor, liable for the delivery of items, you shouldn’t accept that staying the case. Check the project specifications and confirm you can deliver them. Communication is a key part of this.

Set milestones and sign offs
On larger projects, break the work down into smaller chunks and insist that your client signs off on them when they are happy. Keep copies of documentation of any positive results being approved.

Make notes of meeting outcomes
Keep your own set of notes and minutes of contact you have with your client. Pay attention for anything that affects your ability to deliver on your project and address issues in writing with your client.

Agree things by email
You may get on great with your client and trust them when they tell you to ‘just get on with it’. That’s fine but also insist on confirming by email. A paper trail is a good way to ensure that you’ve done what was asked of you.

Finally, make sure you take out insurance to make sure you and your business are protected.

Compare prices and get insurance

Finding competitive liability insurance isn’t complicated. In fact, you can do it right here, right now. Use our public liability or employers’ liability comparison services or fill out the professional indemnity enquiry form to find the right deal for you. Protect your business with comprehensive liability insurance cover. Compare with us today.

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