Do IT contractors need insurance?
According to ContractorUK, demand for IT contractors skyrocketed earlier this year to a 32-month high, thanks to businesses requiring IT solutions to underpin their return to normal. This is, of course, after IT workers became some of the unsung heroes of lockdown, keeping businesses running by providing remote working solutions, often to clients who hadn’t so much as considered home-working as an option previously.
With IT contractors in high demand, it’s more important than ever that you make sure your business insurance is all in order. Having it set up and ready to go will not only protect you from any claims made against you, but will also ensure that you have all insurance obligations to your client filled, and are ready to sign on the dotted line. So, what insurance could an IT contractor need?
Professional indemnity cover for IT contractors
Professional indemnity cover is usually one of the basic minimum insurance requirements of any contract and is vital for IT contractors to protect themselves financially. Professional indemnity protects you against claims of negligence such as making a mistake or giving poor advice. While you would, of course, never think of yourself as negligent, you’re only human and you may make an error.
Say you put in an incorrect line of code, fail to secure customer data, or miss a glitch, your mistake could end up costing your client time and money further down the line. If this happens, your client could make a claim against you for compensation – a figure that could amount to tens or hundreds of thousands of pounds, if not more. Holding professional indemnity cover means that these costs would be covered for you, mitigating the financial risk to yourself and giving you peace of mind.
Public liability cover for IT contractors
Public liability is another insurance usually required for IT contractors as one of your contractual obligations. It protects you against claims made for damage to third parties or property while carrying out your work.
So, for instance, you’re working in your client’s office and have set up your laptop, plugging it in at the wall, but not following proper health and safety protocol. An employee of your client then trips over the loose cable, injuring themselves in the process and claims for compensation. Your public liability insurance would step in here to cover the costs incurred. It’s worth noting that these types of claims can be very costly, so it’s worthwhile ensuring you have the right amount of cover here to prevent you from having to take on any financial risk yourself.
Employers’ liability cover for IT contractors
You’re probably looking at employers’ liability insurance wondering why on earth you would need it when your limited company only employs one person: you. It’s a fair question, but we can explain exactly why IT contractors do need it.
In your client contract, you may have a right to substitution clause. This is a key indicator of IR35 status and, simply put, means you have the right to send an alternate to carry out work instead of you without needing permission from your client. For this to be a true right to substitution, the substitute would need to be sourced, hired and paid by yourself, making them your employee. You may also have an employee if your spouse or partner carries out administrative work for you.
Employers’ liability will cover you for injury or illness incurred by your employees in the line of their work, should they make a claim against you.
Business insurance for IT contractors
Setting up your contractor insurance can be daunting for IT contractors, whether you’re doing it for the first time or upgrading in line with your business growth. There are so many possibilities to consider and so many different types of insurance that you need. Kingsbridge can help here, with our handy package of insurance for contractors that has everything an IT contractor could need.
The package includes:
- Professional indemnity cover;
- Employers’ liability insurance;
- Public liability insurance;
- Occupational personal accident cover – covering you for loss of earnings should you be injured while carrying out your work or travelling to or from work;
- Directors’ and officers’ liability cover – covering you for legal fees arising should your limited company (of which you’re director) be accused of financial mismanagement, a legislative breach, or a health and safety failure.
For more information on Kingsbridge’s contractor insurance, you can call our team of friendly experts on 01242 808740 or get a quote online.