Contractors – what your insurance doesn’t cover

As a contractor, you will most likely have invested in your three fundamental types of insurance:

  • Public Liability - protecting against compensation claims in the event of property damage, or third-party injury as a result of your work.

  • Products Liability - insuring you for the cost of compensation claims in the event of property damage or third-party injury as a result of a product you have sold, recommended or installed.

  • Professional Indemnity - protecting you for the cost of claims arising from financial or professional loss as a result of your personal or professional negligence.

But are you aware of the scenarios these policies don’t cover?

Despite having all the basics, there could still be gaps in your contractors' insurance which could leave you and your business liable for huge financial or professional costs.

Understanding your baseline insurance

Every company is different, but whatever your field, the three standard insurance policies (the 3Ps) mentioned above, will work to protect you against the most common types of claim.

However, what many contractors don’t realise, is that these are designed to act only as baseline cover. This means that for more specialised risks affecting your particular type of business, it is likely that your standard policy will fall short of cover.

Concerned about potential gaps in insurance coverage?

Take a look at these additional policies, and consider whether your business might benefit from more specialised cover.

Office Contents Insurance

Many contractors aren’t aware that their standard insurance doesn’t provide protection for office contents or equipment. But Office Contents and Computer insurance isn’t a huge expense and will provide you with cover for everything from furnishings and carpets to desktop computers and other electrical equipment.

Some policies can even be extended to include portable equipment such as laptops and company phones.

Cyber Insurance and Crime (including Social Engineering)

Increasingly relevant in today’s climate, Cyber Insurance covers a number of eventualities, from loss of data due to a computer virus, to cyber-related liability and the costs of hacking.

Meanwhile, in response to an increase in social engineering scams manipulating individuals into transferring company money via email or third-party websites, a Crime policy will provide the additional cover to protect you against electronic theft.

Increased Cost of Working (Business Interruption)

Increased Cost of Working is a specialist type of Business Interruption insurance designed to cover you after significant property damage or loss which might lead to an immediate reduction in turnover or revenue.

With this insurance your provider would be able to provide temporary office space, cover the costs of overtime and even pay for ‘business as usual’ advertising, so you can continue working without interruption.

Directors and Officers' Liability

A type of liability cover, Directors and Officers’ Liability insurance protects individuals for claims made against them personally for actual or alleged wrongful acts while serving on a board of directors and/or as a company officer.

This includes but is not limited to protection against breach of trust, breach of duty, negligence and defamation.

Employers’ Liability Insurance

Employers’ Liability insurance is a statutory requirement for any employer. Under this policy, indemnity is provided up to £10m for standard policies, to cover your employees for injury following your negligence, or a health and safety failing within your business.

For business with large number of staff, ask your provider about increased indemnity limits.

Public and Products Liability - Excess Layer

You might not be aware, but there are some occasions where you may be asked to provide Public and Products Liability cover with an indemnity higher than your standard insurance policy.

Public bodies such as councils, schools and hospitals often ask for limit in excess of £10,000,000, leaving you liable for huge costs if something were to go wrong.

If you regularly work with public bodies requiring an excess of your indemnity cover, you may need to arrange additional ‘top-up’ cover on a separate policy.

Be sure to seek advice from your broker if you are unsure about what additional insurance covers you may require for your contracting business.