Contractors Professional Indemnity Insurance-if you work as a contractor providing consultancy advice, or services where customers rely on your professional knowledge and opinion – then you may require professional indemnity insurance. Many contractors also use the phrase contractors indemnity insurance, when shopping around for a cheaper quote at renewal time. This insurance policy will cover you in the event that the company that is contracting you to undertake project work, subsequently makes a claim for compensation against you, relating to professional advice or services you were originally contracted to deliver.
A good contractor lives or dies by his reputation – recommendations are vital to generate new project based consultancy work. So, if you are considering becoming self employed by becoming a freelance contactor, think carefully about how an indemnity policy could help to protect your personal and business reputation. The claims culture has unfortunately meant more and more contractors are becoming embroiled in complex disputes involving multiple parties.
Contractors Indemnity Insurance- example claims
For example, consider the following scenario. You may be an architectural contractor, working as part of a team on a large industrial development, employed to produce a one off report on the soundness of a commercial property conversion. If the client (perhaps the property developer or the builder), acts on your advice – yet several years later faults develop with the new construction – the property developer could be sued by the current tenants. It may be that further costs are required to put right the flawed construction, or further damage is caused to property or to people. In which case, the property developer is likely to seek financial compensation from you as the provider of the original expert advice. In many cases, courts have awarded huge pay-outs to correct errors, or compensate for financial loss. A professional indemnity insurance policy will provide you, as the giver of that original advice, protection for these sorts of scenarios (both to pay compensation and legal fees).
In this scenario, unless you had contractors indemnity insurance, you would have to pay not only for the cost to defend any action brought against you, but also for any compensation award made against you or your business. This represents the recompense being sought from the client. Of course, in our example, it may be that your advice is not the cause of the design flaws. However, in defending yourself to prove this, many legal costs can mount, and these can be covered by insurance. It is always important to be sure that any insurance policy you purchase, covers you for your individual insurance needs. So check the types of cover and the cover limits carefully to make sure they will protect you should disaster occur.
There has been a huge increase in the number of companies outsourcing specific tasks to contractors. However, as more and more small businesses struggle in the recession, many contractors are finding that clients cash flow problems are resulting in more and more unpaid invoices. The pressure on smaller suppliers and contractors, by larger more powerful clients, is forcing more contractors to take legal action against their previous client, for non-payment of services. Therefore, most professional contractors should also consider taking out legal expenses insurance. Never be afraid to take on a large client for non-payment of services! Legal expenses insurance will often pay the cost of employing solicitors to take legal action against client for non-payment of invoices.
Likewise, as a professional contractor, you may also need a variety of other insurances – depending upon your everyday activities. For instance, insurance that covers your tools of trade, the contract works (i.e. the site itself until completion), employers liability insurance (should any injury or loss occur to an employee of yours), and public liability insurance, (should any damage, injury or loss occur to a member of the public or a third party that is not one of your employees).
If you are trying to compare different types of indemnity insurance policies, tailored towards contractors – you may struggle to find a fair basis for comparison. The policy wording is of each individual policy will differ between providers. although most have a general set of conditions clauses, many well be customised towards the needs of individual occupations or interest groups. In order to provide a competitive quote, the insurance company will want to know the types of activities you undertake as a contractor. This may include examples of any project work, client recommendations or any academic qualifications.
You will find the fear or threat of being sued is a strong marketing tactic, of many insurance companies. While this is a completely valid and real concern to many contractors – try an put your own situation into context. Look at the types of work you are doing and the financial impact of something going wrong. As most contractors work on specific defined projects, keeping a quality control process and an audit trail of who said what and when, will help your legal representative fight your corner in any future possible dispute.
If you would like to obtain a no obligation contractors indemnity insurance quote, please click on the ‘get quote’ button above, or give us a call on the telephone number at the top of this webpage.
Here is a sample list of occupations we can provide insurance cover for:-
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