Insurance: What’s in it For Me?

Working as a contractor gives you massive freedom and a great quality of life, however, the flip-side is that it comes with risks.

That’s where insurance comes in – no matter what type of contracting you do, you’ll need to take out some sort of insurance because as a contractor, you’ll no longer be covered by your employer’s business insurance.

The most important insurances to consider taking up are public liability and income protection insurance.

Public Liability

Public liability insurance will protect you in the event that you lose or damage property belonging to a third party or you cause personal injury to another person in the course of your work. 

This is an important insurance to have because, in the event that you cause property or personal damage, the company or person hiring you is not legally responsible, which means their own public liability insurance will not cover any claim. It’s up to your insurance cover to come through and without appropriate cover, you could be exposed to significant financial risk.

Because the cost of personal or property damage can be high and the risks can be great, many hirers will require you to have public liability insurance before they agree to take you on as a contractor. Some may even specify a minimum amount of cover that you need. At a minimum this could be $5 million, however, more cover may be required, depending on your work and risk exposure. 

Income Protection

As a contractor, you’re not entitled to sick leave and, in most circumstances, you won’t have access to your hirer’s workers compensation insurance. That means you need to prepare for the loss of income that will come with illness or injury. Putting money aside each week may help you cover a brief period off work, however, if you’re unfortunate to need several months off work, or even to stop working permanently, income protection insurance will be a significant advantage. This is particularly true if you have responsibilities other than yourself – such as personal loans, a mortgage and/or family to consider.

While income protection is more expensive than public liability, it is well worth considering. The premiums will depend on several factors, including your age, health, type of work, and the level of insurance cover you feel you’d need.

Other insurances

Other insurances to consider, depending on your situation and the type of contracts you take on are:

Contractual liability insurance – this provides cover in the event that a claim arises and you are liable due to the contract, and not due to your negligence.

Tools and equipment insurance – as a contractor, you’re most likely to be using your own tools or equipment on the job. This insurance protects you against your tools or equipment being stolen (as long as they were securely stored) or if they’re damaged due to, for instance, a road accident or fire.

There are many insurance providers offering products to meet the needs of contractors. The trick is to talk to more than one and to carefully assess your needs, the options, and the quality of the insurance products recommended. Once you’ve decided on a policy, take the time to review it annually as your needs will inevitably change over time.

At the Ayers Group, we can advise you on the public and professional insurance you need to protect yourself and your business.  Talk to an expert from the Ayers Group today.