Contractor Insurance: Small Business Insurance for Consultants

If you're an independent consultant running a small business, it will at some point become important for you to consider various types of insurance for your company. Some of them are compulsory for business owners, while others are simply a practical way of making sure that your assets and bank account are safe from unexpected losses. Contractor insurance protects your business from suffering unnecessary financial hardship in case of an accident and can in some cases even be vital to the survival of your enterprise if you do not have the funds to cover your losses.

Contractor insurance plans can cover a number of things: business interruption, worker safety, office and property, theft, and liability, to name a few. Depending on the nature of your business, some of these will be more important than others. If you are an independent management consultant, for instance, you will want to protect yourself from suffering unexpected losses if a client sues you, or if your own property – office, computers, important business files or documents – are damaged or lost. You might also consider protecting your employees from suffering losses if something happens to you by getting personal accident or life insurance.

There are three main areas in which your business can benefit from having an insurance policy. The first one covers different kinds of adversity: property damage, theft, legal expenses, and similar matters. The second area involves you and your employees being protected against the consequences of personal accidents, sickness, or even death. The third one covers different kinds of risks and liability: employers' liability (compulsory by law in the UK), public and product liability, and so on.

Buildings and contents insurance, as well as other kinds of property insurance, protect your company against financial losses if your business premises and assets are damaged in a fire, explosion, flood, or similar accident. Getting an all risks insurance policy will cover all accidents that are not excluded by the insurer in the document. If you run your business out of an office, you should get a policy that covers the full rebuilding cost, which can be significantly higher than the market value of your business premises. In this case, it is a good idea to bring in an expert to do the calculations for you.

Business contents insurance usually includes protection against losses caused by theft, except in cases where it is an employee who steals something from the office. The latter would fall under other risks and be covered by a fidelity guarantee policy. If, however, theft is not committed by an employee and there is any damage to your building or office, a property insurance policy will usually cover this. If the theft involves a personal assault, however, or you lose company cash or cheques, this will generally be covered by a money insurance policy and not business contents.

Legal expenses insurance is another area in which you might want to have your bases covered. The frequent scenarios in which such an insurance policy comes in handy are unfair dismissal claims, recovery of bad debts, legal expenses if your company is investigated on VAT matters, and so on. If you are sued by a client, the legal expenses can also amount to a considerable sum. If you are insured, however, your policy usually covers solicitors and barristers' fees, court costs, expert witnesses, and even the costs of the person suing you if you lose.

Depending on the nature of your work and size of your contract business, you can also get other types of risks insurance: travel insurance if your consulting assignments involve a lot of travelling, fidelity guarantee if you want to protect yourself from financial losses resulting from employee dishonesty, book debts insurance in case your books of account get damaged or stolen, and so on. Insurance companies sometimes offer these types of insurance under a package business policy.

As an employer, you can be held liable if your employees are injured or if your business operations result in injury to anyone. The Health and Safety at Work etc Act 1974 and associated Regulations lay out your legal responsibilities in all such matters. Make sure you are familiar with the document.

By law, if you own a business, you are required to have employers' liability insurance for at least £5 million against legal liability for work related injury, disease or death. Public liability insurance covers similar instances in cases where members of the public are injured or their property damaged. If your company makes or sells products, product liability insurance will cover you in instances where you can be held liable for damage resulting from defects or malfunctioning. Motor vehicle liability insurance is also mandatory in the UK if you own a commercial vehicle or fleet.

As an independent consulting contractor, you can buy package, combined or individual policies from an insurance company or a commercial insurance broker, and tailor them to the requirements of your company. When filling out the proposal form, it is vital that you disclose all the relevant information and that the facts you provide are accurate. If they aren't, the insurer will be free to treat your insurance policy as invalid.

As a business owner working on different kinds of projects and frequently changing gears, the very last thing you need is an accident striking out left field and tripping your business. Going independent is a complicated and risky venture in itself. Covering your consulting business with various types of contractor insurance will eliminate the unecessary risks that can leave you without funds, clients, and means to repair the damages when they occur. Putting these concerns out of your mind will make it easier for you to focus on what is important: getting new projects and customers and growing your contractor business.

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