At Kingsbridge, we often get asked certain questions time and time again. We don’t mind of course – that’s why we’re here. In fact, we thought it might be a good idea to put some of those questions up on the blog so you’ve always got the answers to hand when you need them.
Does the client not cover my insurances?
As you are not a permanent employee of the end client you would not be covered under their insurances unless specifically stated otherwise in your contract. If you make a mistake or damage something the end client is the most likely party to make a claim against you. In addition as a limited company you are your own entity and are not supposed to be under the supervision or control of the end client. Having your own insurance is a key IR35 indicator as it demonstrates you are a bonafide company and fiscally responsible for your own risk.
Do I need employers’ liability even though I do not employ anyone?
Employers’ liability is included because of something called the substitution clause which appears in the majority of contracts. If you cannot work for whatever reason this clause allows you to substitute somebody in to complete the contract on behalf of your limited company.
This is rarely actioned, but is often contractually required and only accounts for a very small percentage of the overall policy price you pay.
I have never been asked for this cover before, why do I need it now?
Almost all agencies and end clients will have something in their contractual terms stating that you need cover, although they may not have directly asked for proof. Even if they do not request proof of cover from you, they are within their rights to make a claim against you if a mistake is made/damage is caused.
Over recent years a stipulation for cover has become more apparent. If a contractor makes a mistake and does not have the appropriate business insurance, the agency and/or end client has to pay for any damages. This has led to greater emphasis being placed on compliance.
My line manager/other contractors told me I do not need this, are they right?
A lot of managers are PAYE members of staff and may not be aware of the differences in requirements for PAYE staff and contractors. Many contractors still do not have cover and are unaware of requirements, you should always refer to your contract to check where you stand.
We’ll be doing more posts along these lines in the future, so keep an eye on the Kingsbridge blog. If you have any questions of your own we’d love to hear from you. You can get in touch with one our friendly customer service team on 01242 808740, or speak to us directly on Twitter, Facebook, or LinkedIn. If you need insurance you can get a quote online in just a few minutes right here.