Our comprehensive insurance policy package includes professional indemnity insurance, public liability insurance, personal accident cover, directors’ and officers’ liability, and employers’ liability. But covering you as you go about your work is only part of what we do. There are numerous other benefits to holding the correct insurance:
It’s a key IR35 indicator:
There’s enough to discuss about IR35 to make another blog post entirely (in fact, we’ve done just that). But, to put it simply, it’s a piece of government legislation aimed at uncovering ‘disguised employment’. What’s that? In essence, ‘disguised employment’ is when a freelancer works on a contract through their limited company, but their working conditions and contract indicate that they are working in the same way as a traditional employee.
If you get caught up in this legislation then your income will be subject to normal income tax and National Insurance contributions, meaning that you’ll lose the advantage of the low salary, high dividends tax arrangement that many contractors benefit from.
If HMRC decide to investigate the validity of your contract against the stipulations of IR35 legislation then they’ll carry out a series of Business Entity Tests. These tests function as one of the ways to prove that your contract is at low, medium, or high risk of being caught out by IR35.
Being covered by professional indemnity insurance (one of the elements of the Kingsbridge policy package) can improve your IR35 stance significantly, and forms a significant part of the Business Entity Test.
Ensuring you are fully covered as a freelance contractor is a vital step towards covering yourself at every level. At Kingsbridge we have designed our core insurance package to cover the risks you’re exposed to as a freelance contractor. This includes Professional Indemnity, Public Liability and Employers’ Liability cover, all at levels that suit the needs of the modern freelancer.
It’s a tax deductible business expense:
As a self-employed person, it’s a given that your business will have a variety of running costs. We know that purchasing insurance is a sizeable expense, but the nice people at HMRC allow you to deduct the cost out of your taxable profit. In short, your insurance policy is an allowable expense. So whatever money you spend on your insurance will remain tax free.
It provides cover for previous work:
Most policies that include professional indemnity insurance will include something called retroactive cover as part of that. Here at Kingsbridge we include it in our package as standard. As long as you’ve got insurance in place at the time a claim is made, you’ll be covered for any claims made against you for work you’ve done previously (within a six year period).
You might be wondering why a cover that looks backwards rather than forwards is necessary. In some circumstances it can take months or even years to discover problems with your work. If you’re an architect, a surveyor, or an engineer then you’ll find retroactive cover particularly useful as you’re more prone than other professions to problems from years ago.
It’s important to look back as well as forwards because professional indemnity works on what is known as a ‘claims made’ basis. If you’ve got retroactive cover then you’re covered, even if you didn’t have insurance back when you initially carried out the work.
Are you a contractor or freelancer seeking insurance? Or do you have some questions that you need answers to? Here at Kingsbridge Contractor Insurance we’re happy to help. Give one of our team a call on 01242 808740, or head on over to our website to learn more and get an instant quote for your insurance cover.