Do contractors need insurance?

Chris Andreou

April 21, 2021

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Contractors

As a contractor working through your own limited company, it is recommended that you are covered by business insurances whether that be for your own peace of mind or in fact something that is mandatory in your contract.

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What is subcontracting? Guide

What is subcontracting?

As an independent contractor, there may come a point in time where you need to consider subcontracting-you might decide to take on work as a subcontractor, or hire a subcontractor for your projects.

Whichever option you're exploring, how do you decide if the benefits truly outweigh the cons? And are there important tips you need to keep in mind?

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What does employers' liability insurance cover? Guide

What does employers' liability insurance cover?

Employers' liability insurance is meant to protect employers from financial losses following work-related accidents. It covers the compensation costs and legal fees that result from being sued by an employee or ex-employee for illness or injury caused by their work in your company.

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What business insurance do I need? Guide

What business insurance do I need?

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner, whether you're a sole trader, or running a partnership or a limited company, the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche.

The protection you'll need will depend on the risks your business faces. In this article, our business insurance partner, Superscript explains the types of business insurance you may want to consider.

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What is a contractor? Guide

What is a contractor?

A contractor is a professional that provides skills and services to a specific client under set terms. The terms can be for a set number of hours, a certain time frame or duration of a project.

A contractor is responsible for their own dealings and has discretion over the work they carry out.

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Public liability insurance vs general liability insurance Guide

Public liability insurance vs general liability insurance

Public liability insurance covers compensation claims made against your business by a third party for injury or damage. For example if a supplier trips on a trailing cable in your shop, or if you visit a client and spill coffee on their computer.

General liability insurance isn't available in the UK.

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How do I become a contractor? Guide

How do I become a contractor?

To become a contractor, you need to:

  • Do your research: The first step you'll need to do is to conduct in-depth research, and think through various important factors-from finances and tax implications, to lifestyle and business opportunities-to ascertain if becoming a contractor is the right decision for you.
  • Decide on how you'll operate: As a contractor, you may operate as a sole trader, through your own limited company, or work with an umbrella company or recruitment agency.
  • Develop a business strategy: Strategic planning isn't set in stone-but working out a plan is still helpful, as it is a way for you to consider multiple perspectives, identify potential opportunities and pitfalls and conceptualise back up plans you could fall back on.
  • Get your business finances and insurance sorted out: Setting up a business bank account, registering a company, determining the level of accounting support you need and investing in business insurance are important aspects you need to sort out before you begin contracting.
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Is business insurance a legal requirement? Guide

Is business insurance a legal requirement?

Employer's liability insurance is the only cover that is mandatory by law for most companies who employ at least one employee.

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How much professional indemnity insurance do I need? Guide

How much professional indemnity insurance do I need?

You can usually choose between £50,000 and £5 million of professional indemnity insurance. Your regulator, professional body or client contracts may indicate you the minimum amount you need. You should also consider the scope of your projects and the potential compensation demand if something went wrong.

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What are the different types of contractors? Guide

What are the different types of contractors?

There are different types of contractor jobs available across diverse sectors. Contractors may be hired to perform services such as:

  • Marketing
  • IT maintenance and support
  • Graphic design
  • Recruitment
  • Business development
  • Catering
  • Construction work
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What is an independent contractor? Guide

What is an independent contractor?

An independent contractor is an individual who is engaged in a work agreement with a company or entity as a non-employee.

Factors that identify an independent contractor are:

  • They have a greater degree of control over their work
  • They offer a special skill set
  • They are able to get a replacement
  • They aren't entitled to employment benefits
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What is personal liability insurance? Guide

What is personal liability insurance?

Personal liability insurance protects you from legal and compensation costs due to injury or property damage to a third party.

It is fairly uncommon to take out this type of insurance, as it is unlikely that your personal activities would pose a risk of injury or accident. However, if you're self-employed or a business owner, there's a good chance that you'll be interacting with customers or the general public on a day-to-day basis. As such, taking up public liability insurance-the commercial equivalent of this cover-is something you'd want to consider.

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Who is liable for damage caused by a defective product? Guide

Who is liable for damage caused by a defective product?

The party that is held liable will depend on the circumstances of each individual case.

If the injury was due to negligence, the party who was negligent will be held liable.

If the injury was caused by a defective product, the "producer" of the product will be held liable. This is generally the manufacturer. In the event that the manufacturer can't be traced, has gone out of business or is located outside the EU, the importer of the product-such as the distributor or supplier-will be held liable.

A party that places its trademark on the product may also be held liable.

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Can I get business insurance before registering my business? Guide

Can I get business insurance before registering my business?

Yes, you can get business insurance before registering your business.

When you're buying your policy, information that your insurer will ask for include your business address, trade type and actual or projected turnover. You may also be asked about your business structure.

Your insurer won't ask about your company registration number (CRN) or other business registration details. As such, you'll be able to buy business insurance while you're in the midst of settling the paperwork you need to set up your company.

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What is contractor insurance? Guide

What is contractor insurance?

There are several types of insurance that a contractor may benefit from. These policies are known as:

Professional Indemnity Insurance - in case a client sues for making a costly mistake whilst undertaking contractual duties such as the loss of data or unintentional breach of copyright.

Public Liability Insurance - in case a member of the public is injured, or property is damaged as a result of the actions of the company (or its employees).

Employers Liability Insurance - in case an employee is injured (or worse) whilst working for the company. Often mandatory for any company's that has more than one working employee.

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Is public liability insurance compulsory by law? Guide

Is public liability insurance compulsory by law?

While public liability insurance isn't compulsory, you should think about taking out public liability as part of your business insurance policy anyway, as it can protect you if someone makes a claim against you for injury or damage to property suffered because of your business.

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19 Places to Find Contractor Jobs & Roles Guide

19 Places to Find Contractor Jobs & Roles

When you get into contracting, it can get stressful when your project end date is just around the corner and you haven't secured your next role. This amps up even more once you finish a contract and you're looking for your next gig.

As a specialist contractor accounting business founded by contractors, one of the key questions we get asked is about where to find roles. So, we decided to compile a list of some of the best contractor job portals, platforms, recruiters and consultancies.

If you have anything else to add then please let us know at info@goforma.com.

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Business Insurance Guide Guide

Business Insurance Guide

  • What is business insurance?
  • Why do I need business insurance?
  • Types of business insurance
  • Professional indemnity insurance
  • Public and product liability insurance
  • Business contents insurance
  • Employers liability insurance
  • Cyber insurance
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What business insurance do I need? Guide

What business insurance do I need?

Every small business owner needs some combination of business insurance for financial and legal protection against liability in a crisis.

Yet, with limited resources, it can be tempting to look into cutting costs whenever you can. That could mean deciding to purchase only business insurance that you're legally required to have.

But that's overlooking the fact that an uninsured accident could potentially sink your business.

In an Inc. article, startup founder Leo Welder shared about his decision to skip out on a intellectual-property litigation insurance while he was in the process of purchasing general insurance policies for his business.

This proved to be a costly mistake. When his company was later embroiled in a lawsuit with a publicly traded company, he wound up paying several hundred thousand dollars in legal fees.

Looking back on his experience, his advice for fellow business owners is: "It's not just a matter of 'Can I afford this?' but a question of 'Can I afford not to have this?'"

With many different types of business insurance available, it can be difficult figuring out exactly what you need.

Here's when our guide comes into the picture. Below, we answer FAQs concerning business insurance.

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What is business insurance? Guide

What is business insurance?

Business insurance is designed to protect you from the risks associated with running a business.

As a business owner (whether you're a sole trader, or are running a partnership or a limited company), the onus is on you to think about the risks you face as a business-and to get them covered.

While some risks and their accompanying covers are common to most businesses, others are more niche. The protection you'll need will depend on the risks your business faces.

Read Full GuideRead Full GuideCalculate Now

Download Now:

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What is a retroactive date on professional indemnity insurance? Guide

What is a retroactive date on professional indemnity insurance?

The retroactive date on your professional indemnity insurance is the date from which you've held uninterrupted professional indemnity insurance, or a date in the past from which your insurer has agreed to cover you.

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