Contractor Insurance is a Contractor’s Lifeline

Contractors are automatically at a higher risk of financial loss due to scrutiny and negligence than your average employee. This is because, as a professional working via their own limited company or partnership, any mistakes they make, time taken off for illness or potential error they may cause is not covered in any way by an employer or overshadowing company. Basically, a contractor is on their own and must foot the bill if they are ever unable to work or they make mistakes.

This is where the importance of contractor insurance shines through; as with no safety net provided by an employer, financial costs could be huge should the worst happen.

There are a number of insurance policies available to contractors, and each one serves a purpose specifically designed for those who work from a limited company and a contract basis.

  • Professional Indemnity Insurance
  • Tax Liability Cover (IR35 Insurance)
  • Contractor Sickness Cover

These three examples are popular forms of cheap contractor insurance available for contractors specialising from engineering to IT.

Professional Indemnity Insurance (PI insurance) is a shield designed to cover the legal costs and damages should a contractor make any professional errors resulting in financial loss to another party. PI Insurance is one of the most vital and frequently purchased forms of contractor insurance.

Tax Liability Cover (TLC35) is a fantastic example of full protection when it comes to potential loss occurring as a result of anything IR35 related. IR35 is a theoretically devastating risk to contractors, and falling inside the legislation could result in huge financial liabilities. TLC35 in this case is a very important insurance policy to any contractor who wants complete peace of mind when it comes to their status in the eyes of the HMRC.

Contractor Sickness Cover is a policy that is vital to any contractor, and whether prone to accident or not, this policy is one that can prove to be a saviour in the cases where a contractor cannot work. As contractors aren’t paid for sick leave, having an accident could leave one unable to work for lengthy periods of time and this would be a very harsh period without any income. This cover policy provides contractors who are unable to work due to sickness or accidents with monthly payments supplying them with full financial cover.

These are just a few examples of necessary contractor insurance, and no self-employed professional working via a limited company should attempt to succeed in the world of contracting without first considering the risks and fully protecting themselves.

By:Steven Bailey

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