At Kingsbridge, all of our contractor insurance policies include Employers’ Liability insurance cover as standard, but this is not the case across the contractor insurance industry. Many insurers miss it off completely or make it an optional extra, causing many contractors to assume they don’t need it.
And we can see why you may think that. After all, you may well fit into the exemption category (you employ only yourself and own at least 50% of your share capital) as do many contractors. But this is not always the case and just because you are exempt now it doesn’t mean you will be a few months or years down the line.
Why bother with Employers’ Liability cover?
In short, Employers’ Liability cover protects you should an employee make a claim against your Limited Company. For instance, if you employ somebody in a clerical role and they have an accident at work, they could make a claim against you for compensation. The cover will handle this for you, so you don’t have to pay out of your own pocket.
Is Employers’ Liability cover a requirement?
For many agencies and clients, Employers’ Liability cover is a contractual requirement regardless of whether you’re exempt or not. If you sign such a contract and do not hold this cover, you could be found in breach of contract, causing no end of problems.
If you don’t own at least 50% of your share capital, or if you employ anyone else (perhaps you employ your partner part time in an admin role) then Employers’ Liability cover is required by law.
Do I need Employers’ Liability cover if my contract has a substitution clause?
It’s certainly worth considering Employers’ Liability cover if your contract has a substitution clause. If you are unable to complete the work on a project for any reason (e.g. illness) and you employ a suitable substitute to finish the work for you, Employers’ Liability cover will protect you should they make any claims. If you are not covered, you would be obliged to pay any compensation yourself, which could lead to financial difficulties.
Can Employers’ Liability cover help with IR35?
Having Employers’ Liability cover as part of your combined business insurance package is a great IR35 indicator. It is one of the elements that can help prove you are self-employed and not a disguised employee by showing you have responsibility for your own employees. This can save a lot of issues with HMRC, particularly if you are working on any longer-term projects that could leave you looking more like an employee.
As mentioned, Kingsbridge include Employers’ Liability cover as part of their overall contractor insurance package, although it only contributes a very small percentage of the overall policy price. This can give you peace of mind that you’re covered and as well as helping to satisfy any contractual requirements.
If you’d like to speak to a member of the Kingsbridge team about your contractor insurance, call us today on 01242 808740 or take a look at our website. Alternatively you can find us on Twitter, Facebook and LinkedIn.