Our customers often ask us why they need a certain type of insurance cover, and we’ve always found that the best way to explain is by giving them examples. As you may already know, here at Kingsbridge we provide a single, easy to manage package of insurance containing all the cover a modern day contractor or freelancer needs (specifically Professional Indemnity, Public Liability, Employers’ Liability, Directors’ and Officers’ Liability, and Personal Accident cover). One of the most commonly claimed on parts of our policy is Professional Indemnity (also know as PI).
If you’ve been keeping half an eye on the back pages recently, you’ll know what happened at Old Trafford last weekend. To cap off an already abject season, Manchester United’s match against Bournemouth was called off just before kick-off due to the discovery of a ‘suspect package’ in the stadium. Unfortunately, said suspect package wasn’t the long-absent free-flowing, attacking football that the club are famous for, but rather a fake bomb mistakenly left behind and attached to wiring in the toilets after a terror exercise in the stadium the previous week.
It’s fair to say that many people weren’t best pleased. Although the club handled the evacuation extremely well, and should be commended for doing so, the fact that the cause of that evacuation turned out to be innocuous and easily avoidable led to many angry reactions. A fan almost traveled all the way from Sierra Leone for nothing. The Greater Manchester Police and Crime Commissioner labelled the event “outrageous” and “a fiasco”. Traffic chaos was caused, and the evacuation was expensive (costing United around £3 million).
Why is this relevant to a blog about contractor insurance? Because it stands as an excellent, and rather topical, example of how a claim can be made against a contractor. Not only is it extremely likely that the company behind the training exercise and subsequent bomb scare, Security Search Management and Solutions Ltd, will find it very hard to get work again, but owner Christopher Reid is likely to face substantial costs and damages. Hopefully Mr. Reid has adequate insurance cover, and Professional Indemnity cover in particular.
Professional indemnity insurance is designed to protect contractors against claims for negligence (such as making a mistake, or giving bad advice). It also provides cover for loss of documents, loss of data, breach of intellectual property, and defamation and libel. Holding professional indemnity insurance also serves as a key IR35 indicator for contractors – it is seen by HMRC as being a key indicator of genuine self-employment.
If you do make a mistake for which you are responsible or are deemed to have been negligent, then professional indemnity insurance will cover any compensation you have to pay as a result, as well as any legal costs that you may have incurred in the process.
A mistake could end up costing a contractor tens or hundreds of thousands of pounds so it’s vitally important to have the right protection in place. Professional indemnity insurance will also cover the cost of fixing any mistake you may have made, which could help you to avoid having a larger claim made against you.
If you’re a contractor looking for insurance, or simply want to discuss your contracting needs, you can get in touch with one of Customer Services team on 01242 808740. Alternatively, you can get a direct quote on our website right here. We’re on Twitter, Facebook, and LinkedIn too.