Contractors are among the professionals with a high risk of making errors that could result in claims against them. Since they are not part of the formal employees of the company they are working for, the claims may not be covered by the firm’s indemnity insurance. As such, it is crucial for every contractor to ensure that he/she has a suitable professional indemnity policy. Indeed, there are certain misconceptions that some contractors have about the cover; an aspect that ends up costing them heftily. For this reason, this article will compile the crucial information regarding indemnity insurance for contractors.
Similar to other professionals, contractors are not required by law to own an indemnity insurance. However, an error committed by a contractor when delivering his/her services can result in hefty losses that can slow down the growth of the business or result in its total shutdown. As such, it is rational for every contractor to purchase a professional indemnity insurance that suits his/her needs.
- The indemnity insurance is not applicable to my profession
Regardless of the scale of your business or the sector that you are in, you could have an unsatisfied client who decides to take you to court. As such, it is crucial for all contractors to have an indemnity insurance that will cover them in case of an error in their service, claim of negligence, or violation of the contract at work.
- The firm contracting me with avail one for me
It is not all times that the firm contracting you will provide an indemnity policy. Unless, it is clearly indicated in the contract, you should ensure that you obtain one that is suitable for you.
- In case of a claim, the firm contracting me will be liable
It is common for contractors to assume that any claim resulting from an error in their service will be the liability of the firm contracting them. Unfortunately, a client who incurs an injury or property damage can sue the contractor directly. The company contracting you can also sue you for the error in your services. If you do not have an indemnity insurance, this will mean using your own finances to compensate the complainant.
Any claim will be covered by my business insurance
The elements covered by a business insurance are different from those considered in an indemnity policy. On the one hand, a business insurance will protect you against any damage you may incur within your premises. It also includes a public liability cover. These provisions do not include liability for your professional services. For this reason, ensure that you have the right policy before getting into a contract with a client.
I already have a public liability insurance
A public liability insurance covers you in case you cause damage to another individual. However, it is not applicable when a claim is made against you for an error you made when delivering your services.
The policy is meant to protect your reputation and assets in case a client sues you for an error you made while at work. It should be applicable in the following scenarios:
- Legal expenses of the claim
- Defamation and public relations expenses
- Violation of confidentiality or other intellectual property rights
- Offering negligent or misleading advice
- Court attendance costs
- Damage or loss of documents
- Injuries resulting from the services recognized by the policy
- Expenses incurred when responding to a disciplinary committee
- Deeds of dishonesty and fraud
- Intentional damage
- Scenarios and claims known prior to the acquisition of the policy
Different insurance companies have indemnity policies with varying provisions. As such, it is important to evaluate the cost and details of the indemnity cover from different firms in order to purchase one that suits your needs as a contractor. Other factors that you should consider when selecting the policy include the experience of the insurer. You should also go for a company that will help you reach your long-term goals by providing sufficient indemnity cover as your business expands.
There are various insurers within the U.K. who offer indemnity insurance to contractors. These insurance providers differ in terms of the cost of their policies and the embedded details. These insurers include:
A professional indemnity insurance is crucial for all experts in the broad service industry. Contractors are one of the professionals who are at a high risk of making errors that can result in their clients presenting a claim against them. To avoid the high costs that you can incur from such unforeseen scenarios, it is important to compare the small print from different insurers and select an indemnity policy that suits your needs.