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Insurance cover for contractors

As a contractor, you may lose money if you don’t have the right insurance. In some industries having the right insurance is a condition of getting a contract. Here’s where you can find out how to protect yourself.

Look for an insurer with a good credit rating, compare cover and shop around.

Look for an insurer with a good credit rating, compare cover and shop around.

For tips on buying insurance, visit the Sorted website.

Buying Insurance(external link) — Sorted

Cover to think about

What insurance you’ll need depends on the industry you’re in and what you do. Talk to an insurance broker about what best suits your situation. Here are some of the types of insurance you might ask about.

Liability insurance

This protects you if someone sues you or one of your employees for damaging their property or reputation. It also covers you if you:

  • break the law — without meaning to — and are fined or need to defend your actions 
  • make a professional mistake — without meaning to — for example, give bad advice 
  • are sued in your role as a director of the business.

This kind of insurance is important if you’re in an advisory role, like a consultant. It’s also a good idea if you have the potential to damage other people’s buildings, equipment or belongings, for example, when you are a tenant or a cleaner or a painter and decorator.

There are a variety of liability policies available. The type of policy that will suit you depends on the type of work you do.  

Generally, liability policies will cover you for:

  • compensation costs — money you’d have to pay to the organisation suing you, if their case was successful
  • legal costs
  • other costs you may have to cover defending your case, for example any investigative reports you might need for your case.

Business interruption insurance

This covers you for financial losses if you can’t trade after a natural disaster, for example a fire, flood or other insured event. It can also cover you for extra costs that you might face to keep your business operating after a natural disaster.  

Continuity and contingency planning

Emergency planning

Commercial building insurance

Commercial building insurance covers you for damage to buildings you own, for example, from fire, flood, earthquake or other insured event. Note: If your home is used for commercial purposes, your home and contents insurance might not cover you. You should check your home and contents policy if you’re using your home for work.

Natural disasters

Asset insurance

Asset insurance protects items you own and use for contracting, for example, tools, equipment, computers, furniture and stock, from things such as theft and accidental damage. Make sure you know what your policy covers. There are two main types of claim settlements available:

  • Replacement — the most common settlement basis, this policy pays the full costs of replacing or repairing an item.
  • Indemnity – which takes wear, tear and depreciation into account when paying your claim.

Commercial vehicle insurance

If you use a vehicle for work you may need a commercial vehicle insurance policy.

Cyber Insurance

Computer hacks can result in lost customer data, such as your list of debtors and private information. Cyber insurance will cover costs connected with restoring information, using external IT experts to help you with recovery, replacing hacked computers, lost income while your business cannot operate and your financial liability to your customer.

Transit insurance

This covers you if equipment or stock is damaged when you or a freight company is moving it.

Common business assets checklist

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