Mandatory Contractor Insurance Requirements in the UK

Choosing to be a contractor comes with many rewards and responsibilities, including understanding contractor insurance requirements in the UK, if that’s where you want to work. Flexibility, higher earning potential, and independence draw many skilled professionals to contracting, especially those that value the freedom that comes with charting the course of their career.

At the same time, there are numerous challenges that come with being  a contractor. Insurance is one way contractors can lower their operational risk. With so many types of insurance policies available, contractors can tailor their plan to cover unforeseen events like illness, accidents, extreme weather and property damage.

This article summarizes what types of contractor insurance are available, which ones are mandatory, and what’s automatically covered if you join an umbrella company

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Mandatory Insurance Requirements for UK Contractors

Employer’s Liability Insurance

Employer’s liability insurance is a legal requirement in the UK under the Employer’s Liability Act of 1969. It protects you in the event you become injured or ill while on the job and provides benefits if you can no longer work.

Failure to obtain employer’s liability insurance can result in serious repercussions. Possible fines include £2,500 per day for being uninsured in addition to £1,000 if you either fail to provide proof or refuse to make it available to inspectors upon request.

Employer’s liability insurance is not legally required in some cases. Self-employed contractors or those who own a single-person limited company with more than a 50% capital share do not require insurance. Companies comprised strictly of family members and equal partnerships with no other employees are also exempted.

Umbrella organisations like Cool Company cover all employees with employer’s liability insurance, ensuring everyone is protected from illness and injury on the job.

Optional Insurance for UK Contractors

Professional Indemnity Insurance

Professional indemnity insurance – also known as PI insurance – covers you in the event a client claims your work has caused them financial or reputational loss resulting from:

  • Unsatisfactory service
  • Design flaws
  • Faulty workmanship
  • Poor professional advice

As a contractor, you may be responsible for any legal fees, expenses, and compensation associated with any claims made against the quality of your products or professional services.

While professional indemnity insurance is not a legal requirement, Cool Company covers all employees so they are protected from any possible claims that may arise in the course of doing business.

Public Liability Insurance

Accidents can happen on the job that may injure staff, customers, private and public property. Contractors that provide services, sell products and interact with the public typically benefit from public liability insurance to mitigate any risks associated with doing business.

While not legally required, Cool Company provides public liability insurance to all employees. This ensures everyone is protected from claims that can include injuries to others resulting from accidents on the job or property damages.

Personal Accident Coverage

Personal accident coverage pays out claims arising from a severe injury or death as the result of:

  • Workplace accidents and injuries
  • Criminal violence
  • Road traffic accidents
  • Slips or spillages
  • Amputations following an accident or resulting from an accident

While not a legal requirement, personal accident coverage is deemed essential for professionals working in dangerous environments such as construction workers, drivers and others that work in hazardous environments.

Jury Service Insurance

Jury service insurance protects you from any loss of earnings that can be incurred from losing income due to jury duty. Depending on the policy, it can cover up to £500 per day you are absent from work.

Jury service insurance is not mandatory and in some cases contractors can be excused or have their service deferred. Exemption is determined by the court and depends on the contractor’s circumstances and the type of work being performed.

Business Interruption Insurance

Also known as time loss, consequential loss and loss of profits insurance, business interruption insurance helps contractors cover any financial losses arising from unforeseen events like fires, floods and extreme weather. In the event a company must cease operations, business interruption insurance can cover essential bills such as mortgage or rent, loans, bank overdrafts, wages, utilities, licenses and subscriptions.

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When it comes to mandatory contractor insurance in the UK, Cool Company has you covered

Cool Company provides all employees, including those considering contractor insurance in the UK, with employer liability, professional indemnity, and public liability insurance that can protect them from:

  • Serious injury or illness on the job
  • Legal fees if employers sue for damages caused by unsatisfactory service, work quality, design issues and professional advice that resulted in financial loss
  • Injuries to staff and customers arising from workplace accidents
  • Damages to private and public property resulting from workplace accidents

Taking out the right insurance policies can provide you with coverage from all these unfortunate events, and much more. Cool Company has you covered with the mandatory contractor insurance you need while taking care of taxes and employment protection issues so you can focus on your business.