Professional Indemnity Insurance
Professional
indemnity insurance protects you against your legal liability for losses
suffered by your customers as a result of your negligent advice. It is legally
required in certain professions, such as law, accountancy and financial
services. It is common in other areas, such as management and computer
consultancy, publishing, engineering and design. If you give any advice which could
make you liable, or if you are working in a collaborative arrangement, you
should have a suitable policy. Most of our contractors have policies for £1m
but it would depend on your potential liabilities.
Public Liability Insurance
Public
liability insurance covers you against accidents to members of the public or
damage to property that occurs as a result of your business activities. It also
covers any related legal costs. Even if you work from home, you may need public
liability cover. If clients visit you there, and they injure themselves while
they are on your premises – it could be something as silly as tripping over a
computer cable. If you regularly work off-site, your policy should cover this
too. If your new contract specifies this, you will need to purchase it.
Employer Liability Insurance
The
Employers’ Liability (Compulsory Insurance) Act 1969 requires all employers,
unless they are exempt, to have at least £5 million of employers’ liability
insurance with an approved insurer to protect them against claims from
employees for accidents or sickness caused through work. In practice, most
insurers offer at least £10 million cover.
The law
was amended with effect from 28 February 2005 to exempt very small businesses
that employ only their owner - see the Employers’ Liability (Compulsory Insurance)
(Amendment) Regulations 2004, SI 2004/2882. In a letter to PCG, the Department
for Work and Pensions (DWP) confirmed that if a limited company employs only
the owner, and that owner owns more than 50 per cent of the issued share
capital, then the company is exempt.
As a
freelance consultant or contractor operating outside IR35, however, you are
likely to have a substitution clause in your contracts. Without employers’
liability insurance, you cannot fulfil this clause without breaking the law, so
in practice you ought to have cover.
If this
does not apply to your contract, then firstly, if you are a husband and wife
team, or your sons/daughters assist, then you generally do not need Employer's
liability cover for them. If you are in doubt, then usually a good way round it
is to insure them jointly with you – that way all the cover applies to them as
well as you.
The
exception to this is, if you are a Limited Company with two or more working
directors, then you MUST by law have this cover even if you are a husband and
wife team under the Employers Liability (Compulsory Insurance) Act 1969. There
is an exception to this legal requirement which is a Limited Company with only
ONE working person who is a director and owns 50% or more of the issued share
capital, i.e. there are no other persons whatsoever doing any work in the
company.
It is
also usual for Employers Liability to be required if you have work experience
students or volunteers assisting you even if there is no payment.
Insurance Provider
We can
put you in touch with a financial advisor who can assist with a range of
insurances. Please contact your account manager for details.