Five reasons why contractors need public liability insurance

1. Increase your credibility and assure your clients

Having public liability insurance is often a requirement for clients when they are looking for contractors, whether you operate in consultancy, IT or finance. Without it you could lose valuable work and your business will lose money.

Having comprehensive insurance also reassures potential customers that your business is reputable and gives them one less thing to worry about in the hiring process.

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2. Avoid financial ruin

Public Liability claims can be hugely expensive to cover. If a contractor was found liable for the costs of an accident, they could possibly be liable to pay thousands – even hundreds of thousands of pounds. For a hired-in contractor, finding this sort of money would most likely be impossible and therefore closing the business may be the only option.

Public Liability Insurance would in most cases cover the cost of the compensation payment, along with any related legal fees.

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3. Protect your clients from harm and their property from damage

Most businesses have contact with the general public in their daily activities. Whether this is simply through working in a clients’ home as a plumber or running an office where visitors come and go, your business has a duty to protect these people and their property as far as possible.

Part of this duty is having the appropriate insurance to cover any accidents that happen to them through the fault of you or your business. When dealing with you they should feel secure in the knowledge that they can be appropriately compensated should they be seriously injured or their property damaged. That being said, this is more for your peace of mind than theirs, as no-one really expects the worst to happen to them or thinks about the insurance until they suddenly need to!

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4. Accidents and mistakes are just waiting to happen

Don’t assume that there won’t be accidents or mistakes just because you have followed all the appropriate health and safety measures. True, it is possible to run a business for many years without it impacting badly on someone else. But is this complacency worth the risk to your livelihood?

Many people don’t think about taking out insurance until they actually need it. In business you can’t afford to take such a risk.

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5. Don’t believe us? Read this recent case study…

An IT contractor brings his laptop into the office and an employee trips over the cable:

Whilst logging into the office’s network, a contractor plugs his laptop into the power supply. Ten minutes later one of the office’s employees walks past the desk and trips over the power cable and lands awkwardly on the floor.

As a contractor, the IT consultant was expected to have his own public liability insurance, and as such the injured party was able to claim damages covering: PSLA (pain, suffering and loss of amenity) of £15,000; Loss of earnings to £8,000; Care to trial of £1,500; Medical expenses of £7,000; Claimant costs of £8,500 and his own costs of £7,000.

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Published: Tuesday, October 07, 2008

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