The Benefits Of Pi Insurance For Contractors
The importance of contractor insurance for modern UK contractors within the current business climate is vast
. Insurance is vital in any walks of life, and this is no different to that of the business sphere and professional field. Business insurance differs from large umbrella policies to smaller contractor insurances, and each policy is vital in its own sector.For contractors, PI Insurance is a very beneficial cover policy, and is by far the most popular and arguably most necessary form of protection for self-employed individuals. Contractors are professionals who work via their own limited companies, offering their services to be hired by larger firms. Because of this, contractors are not eligible to many of the advantages that proper employees gain from being in employment, and one of the most vital of these is professional insurance.
As contractors do not benefit from any protective insurance provided by an employer, they are 100% liable for their own actions and as a result are potentially vulnerable to serious financial loss. This lack of protective cover ups the risks that already exist in the contracting profession, further reiterates the need for proper contractor insurance, and particularly PI Insurance.
The PI Insurance covers the policy holder against error, omission or negligence made whilst carrying out professional duties. If a contractor was to cause an error that resulted in financial loss to a client, and then they could be liable to significant claims of negligence that may result in sever financial loss. Because of these scenarios that contractors are often faced with, PI Insurance acts as a safety net, protecting their professional indemnity and covering them from possible financial loss.
A common occurrence for contractors is that within their contracts there will be a number of contractual obligations that they must take on board and meet before continuing with a contract and ultimately getting work. Contractor insurance is often one of these and PI Insurance is the most common contractually specified policy. The fact that PI Insurance is actually a necessary purchase when seeking contracts is an example of the sheer importance of the policy and how vital it is for a contractor to buy.
As well as providing relevant, protective cover, the PI insurance policy acts as a tool in which a contractor can bolster their IR35 perspective in the eyes of HMRC. Contractors are every frequently under scrutiny from the tax office because of a tax legislation called IR35. This legislation is designed to assess whether or not contractors are self-employed, and not disguised employees doing so in order to pay less tax. PI Insurance can be used as a tool to show HMRC that the contractor is a business in its own account, having necessary contractor insurance and thus taking necessary risks.
PI Insurance is a popular, beneficial and recommended cover policy to any UK contractor, and any professional entering the contracting market is strongly advised to purchase the policy or seek advice and information regarding indemnity.
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