Employers Liability Insurance For Contractors
UK contractors are professional individuals who work via limited companies, providing their services to larger firms and businesses that are in need of their expertise. Contractors gain work by their limited company being hired for the skills that the contractor provides, and works only on contract bases agreed before any proposed work begins.
As contractors are professionals who work through their own companies, they are not employed by the firm that may be hiring them. Although they may be working at a firm for extensive periods of time, the fact that contractors are not strictly employees has a huge impact on their professional status, having both positive and potentially negative outcomes.
A huge difference when it comes to contractors compared to average employees is the fact that because of no protection provided by an employer, the need for contractor insurance is vast. Employers Liability Insurance, often referred to as 'EL', is an essential form of protection for contractors who may have others operating within their limited company.
This scenario is common amongst contracting, and these workers act as employees for the contractor's own company. Because of this, like any employer would have to cover their employees, Employers Liability Insurance exists in order to protect the contractor financially if any claims were to be made against them by any existing employees of their limited company as a result of any injury or death.
Employers have a large amount of responsibilities on their shoulders, and for contractors, who employ others through their limited company, the same duties apply and dangers exist, therefore highlighting the real importance of the Employer's Liability Insurance policy. Not only does the insurance cover provide quality insurance, but Employers Liability Insurance is actually a legal requirement for a contractor to hold unless they are the only employee of their limited company.
To put it simply, the policy is necessary if a contractor is not working totally individually. The policy itself will indemnify the policy holder in regards to their legal liability costs and expenses concerning injury or death to employees.
Employers Liability Insurance is an effective policy if there are any additional workers within a limited company, but the policy also applies to any contractor who does not own over 51% of the company's shares.
As well as the insurance providing the obvious protective cover, contractor insurance aids contractors in other aspects as opposed to only the clear indemnity provided in policy wordings. Employers Liability Insurance is a very important policy to any contractor who isn't operating completely individually, and is a policy that legally cannot be overlooked. As well as this, this form of protection is a clear statement to the tax office that the contractor is working lawfully and is aware of the risks and obligations involved with the contracting profession. HMRC take a keen interest in contracting, with tax issues being discussed constantly, but contractors who hold certain insurance policies, such as EL, are looked upon as legitimate enterprises from a tax perspective.
by: Chris Carvill