Covering compensation payments and legal costs if a member of the public sues your business because they’ve been injured or their property has been damaged, public indemnity insurance is highly recommended for all businesses. Many professions need to have p insurance as part of their respective industry body’s regulatory requirements and so always double check your contractual agreements.
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Can I get business insurance without a trade licence?
You can purchase business insurance before you obtain your trade licence. However, if you start trading without having the required licence, your policy may be deemed invalid.
Do contractors need insurance?
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.
What is employers' liability insurance?
Employer's liability insurance is designed to cover workplace injury or property damage claims made by employees. It is the only business insurance required by law for businesses with one or more employees.
What does professional indemnity insurance cover?
Professional indemnity insurance is designed to protect you if your client suffers a financial loss as a result of your professional services. It covers the cost of your legal defence and compensation you need to pay to a client for a claim made against you.
What does business insurance cover?
Different types of business insurance cover different risks. Public liability insurance covers compensation claims made by a member of the public, while professional indemnity insurance covers you if you're sued by a client. Employers' liability insurance covers compensation claims from employees.
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.
Do I need professional indemnity insurance?
Depending on the industry you operate in or professional bodies you're a part of, it may be a requirement to have professional indemnity insurance. Alternatively, you may decide that you need this cover if your business gives advice, offers a professional service, or handles client data or intellectual property.
What are the difference between public liability and professional indemnity insurance?
Public liability insurance and professional indemnity insurance are both business insurance covers designed to cover compensation claims. However, the types of compensation claims they cover can be quite different.
Public liability insurance can cover compensation claims if you're sued by a member of the public for injury or damage, while professional indemnity insurance can cover compensation claims if you're sued by a client for a mistake that you make in your work.
Understanding how business liability insurances protects your company
Most businesses don't consider their doors open and ready for customers without a full battery of liability and premises insurance protection. And for good reason.
Insurance isn't just something you have to have according to laws or industry regulations; it's a type of legal and financial protection that every business needs, no matter how big or small.
While everyone can see the importance of insuring your physical building and its contents, it may be more difficult to see the big picture when it comes to liability insurance. Why do you need so much insurance, why so many layered policies?
That is exactly what we are here to answer today.
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.
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.
What is professional indemnity insurance?
Professional indemnity insurance covers risks in association with your professional services. It protects your business from legal and compensation costs that arise should a client make a claim against you, under circumstances such as:
- Defamation and libel
- Loss of documents or data
- Professional negligence
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.
Do I need public liability insurance?
Public liability insurance isn't compulsory by law, but many businesses decide that they need it to protect themselves from crippling compensation costs, and also to satisfy the requirements of potential clients.
As it can protect you if you're sued by a member of the public, this insurance is particularly important if you interact with customers, suppliers or passersby in the course of your work.
Public liability claim examples
Public liability insurance claim examples:
1. Claims made against an electrician:
An electrician was engaged for the installation of a heating system in a commercial building. However, the installation was incorrectly done and caused a fire resulting in damages to the property, which amounted to £50,000. The electrician's insurance policy covered the cost of damage.
2. Claims made against a furniture assembler:
A cabinet that the furniture assembler had fitted fell from the wall, and caused injury to another contractor. The furniture assembler was required to pay just £250, as his insurance policy was able to cover the majority of the costs (£25,235).
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.