Freelancer insurance for UK contractors
In a marketplace increasingly focussed on compliance, it has never been more important for contractors to safeguard themselves and their companies.
HSQ Recruitment requires contractors to secure no less than £1,000,000 Professional Indemnity insurance, £2,000,000 Public Liability insurance and £5,000,000 Employers Liability insurance, alongside any other industry-specific insurance.
Why do I need insurance?
The majority of clients in the engineering and professional services sectors require contractors on assignment to have appropriate insurance in place. This is to not only protect their business but also to ensure that any contractor on assignment is suitably covered should any issue arise when they are doing their jobs. Failing to have insurance is a breach of contract and could result in the agency seeking recovery from you in the event of a claim.
If your actions lead to anything being damaged or anybody being injured it is essential that you are insured, as it may result in a costly claim being made against you. Likewise, if in the course of carrying out an assignment, you give your client any advice or complete any work for them that leads to them losing money, they may bring a claim against you. In such a situation, having appropriate insurance in place could be what keeps you in business.
Adequate business insurance is insisted upon by the majority of clients. To ensure that your business is protected financially and you are complying with the requirements of our clients, we ask that all of our contractor candidates have suitable cover in place at all times.
Finally, ‘taking financial risk’ is one of the factors considered by HMRC when reviewing IR35 status.
Does HSQ Recruitment require me to have insurance?
Yes. In HSQ Recruitment's ‘Terms of Engagement’ contract, we stipulate that all of our contractors working via their own Limited Company must have adequate Professional Indemnity Insurance (minimum cover of £1m), Public Liability Insurance (minimum cover of £2m) and Employer's Liability Insurance (to the statutory requirement) in place – plus any additional insurances, if required by the end client. You will be asked to provide HS2Recruitment.com with copies of your valid policies before you begin your assignment.
What insurances do I need and what cover do they provide?
Professional indemnity covers you if you are accused of professional negligence, making an error or omission, or giving bad advice which results in your client losing money. This provides cover for legal defence costs and damages awarded against you.
Public liabilityprovides cover if someone is injured or property is damaged as a result of your actions while carrying out your job. Whether you are on your own premises or at a client’s site, you have a duty to protect anyone who might be affected by your activities. If you fail to do this, you may have to pay substantial compensation.
Employers liability provides protection against claims from employees. It is compulsory for almost all UK businesses. Regardless of your set-up, this is often insisted on by clients who may require you to comply with a standardised contract. Even if you are the sole employee of your company, Employers Liability insurance would protect your spouse/family in the event of your death or injury.
Do I need insurance after I have completed the assignment?
Yes. The HSQ Recruitment ‘Terms of Engagement’ contract states that contractors ‘shall maintain the Professional Indemnity insurance policy in force for at least six years following completion of the Assignment.’
Professional indemnity cover is provided on a ‘claims made’ basis. Effectively cover needs to be in force at the time a claim is brought against you, rather than when the incident actually occurred. It should not be purchased just while you are on an assignment or contract, because the cover ends as soon as you cancel or lapse the policy.
Can I remain with my existing insurance provider or use an alternative provider?
If you already have the required insurance cover in place you can forward over your valid certificate/schedule to your consultant.