Protecting Your Finances With Contractors Insurance
Running a business as a contractor in the UK brings with it legal responsibilities and obligations that need to be fulfilled
. In order to ensure that your business is well protected and to lessen the financial burden in case of any claims being made against you, it is advisable to purchase adequate contractors insurance. Claims can be very high, and cause a significant amount of financial stress to any contractor. As a contractor, you ought to be aware of the fact that clients do have a legal recourse in the event of negligence on the part of the contractor.
Contractors insurance ought to include professional indemnity insurance, public liability insurance, and employee liability insurance. Optional cover includes plant and materials, office insurance, business premises and revenue protection among others. Being covered by these three types of insurance will provide you with full protection and peace of mind. Considering the level of protection you receive, the cost of contractors insurance is negligible. The costs involved depend on several factors including your annual turnover, the number of employees, and the level of cover required.
Professional indemnity insurance covers the costs of damages that may become payable and the legal fees involved in defending a claim made against you. Any mistake or omission on your part as a contractor can result in a client claiming financial losses, which leaves you with no alternative but to defend the claim made against you. Sometimes, a dissatisfied client may also file a claim for reason. While this may be judged in your favor, there are substantial legal costs involved which also lead to loss of productive hours. If you are investigated or sued by HM Revenue and Customs there are considerable legal costs involved in defending your case. Moreover, it is mandatory for you to have adequate insurance in order to execute a contract. Your client has the right to ask you for adequate proof of insurance.
With contactors insurance your tools and other equipment being used while you are under contract will be well covered against loss or damage. In most cases, the insurance will cover all your tools, and both fixed and unfixed materials while at the worksite and in transit all over the UK. This includes cover against accidental and malicious damage, and theft at a contract site.
Most insurance providers offer a tailor made policy. The level of professional indemnity required depends on the nature of your business, with levels starting from GBP 50,000 to GBP 5 million. Public liability insurance of up to GBP 10 million is advisable along with employers' liability insurance of up to GBP 10 million as well. Accidents can happen at the workplace, necessitating the need for adequate employers' liability insurance as part of your contractors' insurance cover. Failure to have employer liability insurance can result in a fine of GPB 2,500 per day for the period you are uninsured.
It is advisable that you determine the level or professional indemnity cover you need and purchase it accordingly. A professional insurance advisor will be able to guide you on the type of contractors' insurance cover you require. In addition, make sure you understand any exclusion so that you do not end up with inadequate cover.
by: Paul Delaney
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