Insurance provides protection for both contractor limited companies as legal entities and for the directors who work for them and own shares in them. There are multiple types of contractor insurance available which we consider in this article.
Yes. If a contractor limited company has no insurance policies to protect it, it (and its directors) could, depending on the agreement covering the work, be liable for compensation, losses, client costs, client legal costs, and claims for damages.
Contractor professional indemnity insurance covers against claims made by a client as a result of work carried out. Clients are entitled to approach a contractor for costs and damages if a mistake is made where the mistake causes financial or reputational damage. These claims can be made for up to 6 years after sign-off of work.
As most clients appreciate that contractor limited companies lack the funds to pay damages and other costs, they will normally insist on the presence of a professional indemnity insurance policy with cover of up to £1m (or higher, depending on the nature of the work).
To be covered for any claim, a policy must have been in place when the work that has given cause to a complaint was carried out.
Contractor public liability insurance provides cover in case someone working for a contractor limited company (including its director) accidentally injures someone else or damages their property.
Contractor public liability insurance is not compulsory. However, contractor limited companies and their representatives have a duty of care towards any other person and any property which may be affected when work is being carried out.
To be covered for any claim, a public liability insurance policy must have been active at the time when the injury or damage was caused. Cover is normally for £2m although some clients may insist on a higher amount prior to the commencement of work.
Contractor employer’s liability insurance provides coverage for contractor limited companies if one of their staff (for example, a substitute) is injured or becomes ill during or because of the work they have been tasked to complete. Contractor employer’s liability insurance is not needed if the only employee at a contractor limited company is the director who owns more than half of the share capital.
If the director of a contractor limited company is accused of not acting conscientiously, competently, or honestly during the execution of their duties, then they run the risk of being subject to claims made by regulators, creditors, shareholders, or any other affected person or organisation.
Director’s liability insurance provides cover if this type of claim is made.
If the income of a contractor limited company is substantially or wholly reliant on one person and that person becomes unable to work, an income security insurance policy may provide cover in these circumstances.
However, many contractors believe that income security insurance is as reliable as the now widely-discredited payment protection insurance and that investment in an income security policy does not always represent value for money.
Prior to taking out a contractor income protection policy, a contractor should check:
Contractor personal accident insurance provides weekly pay outs to contractors unable to work because of an accident at work. After all, if you’re unable to perform your contract the chances are you will loose it. Contractor personal accident insurance policies will generally pay a lump sum on death or permanent disability caused by an occupational accident.
Many contractor limited company directors will often enlist the support of their accountant, solicitor, or financial advisor in finding suitable policies in the first case. Prior to entering any insurance agreement, the Key Facts document provided by a potential insurer should be checked over by an advisor to check for efficacy.
Policies covering the contractor limited company should be paid by the limited company. Policies covering income security and personal accidents can be paid either by a director personally or via the company. Contractors should check with their accountant on a case-by-case basis however, in most circumstances, policies covering income security and personal accidents are an allowable business expense and should be paid by the limited company rather than using a director’s post-tax salary.
Any contractor considering switching to an umbrella company will want to know how to find the best provider to work with.
Although you could spend your precious time and energy searching the web for the best umbrella company, there is an easier way – using an umbrella calculator.
In this guide, Umbrella Supermarket explains why every contractor should use an umbrella calculator in 2021.
If you are considering contracting you will need to decide on PAYE or umbrella.
It can be a difficult decision to make and contractors will inevitably be questioning which option will be the best for them.
To help every contractor get on the right track for them, in this guide Umbrella Supermarket looks at PAYE vs umbrella, outlining the key differences and how this will impact you.
There are many reasons that contractors across the UK opt to work under an umbrella company.
Umbrella companies offer an easy way to contract and remove the need for the contractors to worry about the burdens of admin, finances, tax and IR35, all things that limited company contractors have to deal with.
For this reason, many contractors will be weighing up their options and questioning whether it is worth using an umbrella company in 2021. To help make the decision that little bit easier, Umbrella Supermarket has put together this guide on the pros and cons of using an umbrella company.
Any contractor that is considering operating through an umbrella company in 2021 will need to understand Umbrella Company fees - from why an umbrella company charges fees, how they are paid to how much the contractor will pay.
In this guide, Umbrella Supermarket answers those all-important questions to help every contractor know exactly where they stand when it comes to umbrella company fees.
If you’ve made the decision to contract through an umbrella company in 2021, you will next need to find an umbrella company that’s right for you.
After all, there are lots of umbrella companies out there, so how do you know which one to choose?
To help you find the best umbrella company for you, in this guide Umbrella Supermarket outlines what makes a good umbrella company, so you can rest assured you’re making the right move.
One of the many advantages to operating through an umbrella company for contractors is that they become an employee of their chosen provider.
In turn, this means that the contractor will be automatically enrolled onto the umbrella company’s workplace pension scheme.
To help contractors find out more about umbrella company pensions Umbrella Supermarket has put together this handy guide.
If you are considering contracting through an umbrella company you will naturally have questions and queries over how they work.
After all, making the move to umbrella can be a big step for contractors. To help, in this guide Umbrella Supermarket explains how to get started with an umbrella company and share our top tips for using one in 2021.
PAYE or umbrella is a question asked by every contractor. Which one you opt for will have a big impact on your contracting career and lifestyle. So, it's important to make the right decision for you.
To help makes things a little bit easier, Umbrella Supermarket has put together this guide on PAYE or umbrella, outlining the key differences between each, to help you make the best and most informed decision for you.
One of the many benefits to working through an umbrella company is that you will receive holiday pay as well as a range of other statutory benefits including sick pay, maternity and paternity pay.
To find out more about umbrella company holiday pay, and how to calculate how much you will be entitled to, Umbrella Supermarket has put together this handy guide.
Contractors must make several decisions throughout their contracting careers. One big decision contractors have to make is how they will operate.
One way that contractors can work is through an umbrella company.
Umbrella companies have become an increasingly popular way to contract in the past few years, offering many benefits to the contractor. But, how do you know whether this option is right for you?
To help every contractor make the right decision for them, in this guide, Umbrella Supermarket explains when not to use an umbrella company.
There are tons of benefits to using an umbrella company, which is why they have become such a popular option for contractors in recent years.
After all, an umbrella company takes away the stress and hassle of operating through a limited company whilst offering contractors a range of advantages, such as statutory rights, paying them a salary, deducting correct tax levels and National Insurance, and taking care of tasks like expense processing and invoicing.
However, as more and more contractors opt to use the services of an umbrella company, more providers have started to claim that they are HMRC approved.
To bust the myths around HMRC approved umbrella companies and get straight to the facts, in today's guide Umbrella Supermarket look at whether HMRC approved umbrella companies really exist, so you know exactly where you stand.
If you're considering making the leap to contracting, you will understandably want to know how much you will have to pay in umbrella company costs. After all, this amount comes directly out of the contractor’s pocket, so it’s important to be clued up on how much you should expect to pay.
To help contractors, in this guide Umbrella Supermarket answer the all-important question of how umbrella companies cost in 2021.
