Business insurance for Contractors

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    Chris Godfrey

    Page written by Chris Godfrey. Last reviewed on April 24, 2024. Next review due April 6, 2025.

    Controlling the day-to-day oversight of a project, managing vendors and tradesmen, and communicating with all involved parties throughout the course of an assignment can be a big responsibility that’s often fraught with risks – accidents can happen, materials and technology can fail, bad weather can blow the roof right off your schedule. Any one of these events could cause lasting harm to your contractor’s business, perhaps even close your business down.

    Fortunately, there’s an answer to this dilemma. Available to all contractors and to cover almost any eventuality, comprehensive contractor insurance is a valuable emergency lifeline. Use it to offset risk, to create a financial cushion, and to avoid the potential for disaster should the best laid plans go wrong. 

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      Why do contractors need insurance?

      The potential for accidents, errors and omissions in any major project is high. To protect against the claims and costs that could arise from these type of problems, contractors buy insurance to meet legal compliance, risk management, and client requirements, as well as to protect their employees, assets and financial stability. 

      This means covering potential damages arising from…

      Accidents and injuries

      It could be a simple slip at work, an injury caused by faulty machinery, or any one of the hundreds of ways employees and vendors can get hurt while working for you – but they all add up to the same thing: The potential for major financial pain. When workers are injured in the course of the work, liability often falls on the contractor who hired them. Claims for injury can run to more than £250,000 depending on the circumstances of the accident and the injury it has caused. Can your business afford this size of loss?

      Technical problems

      Accidents aren’t the only problem that contractors routinely face. Power outages, technology failures, faulty materials, and late deliveries can all affect your schedule, making you liable for late penalties, buying fresh materials and equipment, and redoing work you thought you’d finished. None of these issues come cheap. Some of them can put small and mid-sized contractors completely out of business.

      Loss of earnings

      Contractors are typically paid in stages, with tranches of money paid over as phases of the project are completed. Unfortunately, late completion often means late payment – but your employees, suppliers and vendors will still need paying all the same. Loss of earning due to problems beyond your control can severely hurt your cashflow, impact your ability to operate, put you at risk of default on loans, and disenfranchise your entire workforce.

      Is contractor insurance a legal requirement?

      No. Only Employer’s Liability Insurance is mandatory by law. However, some clients may demand proof that you’re fully insured before doing business with you, and it could be specified in your assignment contract, or required by your industry, professional body, or trade guild. 

      Industries that typically require contractor insurance include:

      • Construction
      • Public Transport
      • Power and Water Utilities
      • Telecommunications 
      • Shipping and Logistics

      What insurance is available for contractors?

      Contractor insurance is a business insurance that comes in all shapes and sizes. From protecting workers and hard assets, to reducing risks caused by bad weather, late deliveries, loss of earnings, and planning errors, the specific types and amounts of insurance contractors need varies according to the nature of the work they are undertaking and their contractual obligations. 

      Important contractor insurance includes:

      Public Liability Insurance

      Public Liability Insurance protects your business if someone is injured, or their property is damaged because of the services that you or your business provides. This type of cover, also known as PL or Liability Insurance, is designed to protect contractors against third party claims for injuries or property damage from a customer or client, passer-by, or a visitor to your business premises – including building sites – whether you’re at fault or not.

      Professional Indemnity Insurance

      Professional Indemnity Insurance, also known as Professional Liability Insurance, is an essential type of cover for businesses that advise clients, help them navigate complex financial or legal affairs, or provide them with vital information that is published in the media. In these kind of cases, errors can cost thousands or even millions in legal compensation claims. Professional Indemnity (PI) can protect you if a client makes a financial loss because of your work and then makes claim against your business. Trade associations, government bodies, public institutions, and major customers will often require proof of a minimum level of PI insurance before contracting business out to you.

      Employers’ Liability Insurance

      Under the Employers Liability Act of 1969, Employers’ Liability Insurance (ELI) is a legal requirement for most UK employers. ELI protects you and your employees, (including those who no longer work for you), should they be injured or become unwell as a result of working for your business. ELI typically covers the associated legal and compensation costs, and other damages of such events, but it can also cover accidental injury or damages caused by an employee to a third party, like your customers. 

      Portable Equipment Cover 

      Portable Equipment Cover protects the machinery and equipment you take from job to job. This includes things like tools, generators, lighting rigs, tech devices, ladders, and testing equipment. The portable nature of these essential items makes them more prone to loss, theft, damage, and accident, and their replacement can often be expensive.

      What does contractor insurance cover?

      Contractor insurance can protect you from:

      • Claims made for injury or damage to employees, sub-contractors, clients, members of the public
      • Property damage
      • Project errors and omissions (also known as contract works)
      • Theft of tools, equipment or plant (both owned by you or hired in) 
      • Loss of earnings
      • Legal disputes
      • And more

      How much does contractor insurance cost?

      Premiums for contractor insurance can start at less than £5 per month, but just as no two UK businesses are alike, so no two contractor’s insurance needs are the same. Costs will depend on your business type and the risks attached to what you do or sell, making every quote unique. 

      How Swoop can help

      All business involves risk, but that doesn’t mean you have to suffer the consequences if things go wrong. Contact Swoop today to discuss all your contractor insurance needs. Don’t let an accident, mistake, or omission wreck the business you’ve worked hard to build.

      Written by

      Chris Godfrey

      Chris is a freelance copywriter and content creator. He has been active in the marketing, advertising, and publishing industries for more than twenty-five years. Writing for Barclays Bank, Metro Bank, Wells Fargo, ABN Amro, Quidco, Legal and General, Inshur Zego, AIG, Met Life, State Farm, Direct Line, insurers and pension funds, his words have appeared online and in print to inform, entertain and explain the complex world of consumer and business finance and insurance.

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