Umbrella Companies | Contractor Business Insurance

Contractor Business Insurance (Umbrella Company Insurance)

It is no secret that there is an element of risk that goes hand in hand with contracting, and there are several situations that could arise from property damage, injury to yourself or another person. Most clients will expect you to have an insurance policy in place before offering you a contract, and thankfully, there are a vast array of insurance packages out there to ensure you are protected at work.


What insurance comes with an umbrella company?

If you’re new to contracting, one thing you’ll be wondering is what insurance do I need to take out in case an unfortunate situation arises? Luckily for you, all this is taken care of when you join an umbrella company.

Every compliant umbrella company will provide its employees with three types of insurance:

  • Public Liability;
  • Professional Indemnity, and;
  • Employers Liability.

The level of cover will vary between providers, but this should be more than enough to protect you at work.

Some umbrellas will also provide you with additional insurances as part of their package, but you should always use a provider which offers the three main ones as standard.

Here’s a brief overview of how the different insurances protect you:


Professional Indemnity Insurance

Professional Indemnity Insurance provides cover for you in case your end client claims compensation for any negligence or mistakes on your part, which has resulted in your client suffering financial loss.

This type of insurance protects you against claims of negligence, defamation, intellectual property infringement and breach of confidence.

Professional Indemnity Insurance will protect against the cost of a claim, plus any legal fees incurred along the way.

As an umbrella company employee, any claims made against you would be against the umbrella company – as they are your employer.

Public Liability Insurance

Many umbrella companies will include Public Liability Insurance as part of their package because the vast majority of contractors come into contact with members of the public at some point while working at the end clients’ site.

It is often a specification of the contract that Public Liability Insurance covers the contractor – as the client’s insurance will not protect them.

Public Liability Insurance provides cover in case something you do causes a member of the public or one of your colleagues’ injury, or another sort of loss. You are also covered if something you do causes damage to their property.


Employers Liability Insurance

Employers Liability is a legal requirement for any business with employees in the UK. It covers incidences where you become ill or are injured as a result of the type of work carried out.

This type of insurance covers umbrella companies against any compensation and legal costs that may arise if they were to be sued by an employee.

Anyone who works the for the umbrella company is covered by Employers Liability Insurance, including contractors and self-employed individuals.


Sector-specific umbrella insurance  

For some sector-specific roles, you may require additional insurance. Sector-specific insurance will cover you for liabilities that arise from claims made by members of the public, as well as your safety or machinery or vehicles you are operating.

For example, if you are working as a driver operating a Heavy Goods Vehicle (HGV), you will need to have Drivers Negligence Insurance. This is because you will face conditions that the average contractor won’t, including dangerous roads, challenging weather conditions, operating a particular type of vehicle and delivery delays.

Luckily, there are many umbrella companies out there that cater to sector-specific requirements and will offer the necessary insurances as part of their package. However, if you require a particular type of insurance, always check it’s something that the umbrella company you’re considering using offers. And if it isn’t, make sure you get the appropriate cover yourself.


Check out our directory for insurance providers you can trust

We’ve created a directory of contractor financial service providers, including insurance providers, which may be able to support you with your contracting journey (which also may be helpful for limited company directors with a PSC, such as information on Relevant Life Plan). But, remember, you shouldn’t need additional insurance because umbrellas include it as part of their service (unless you work in specific fields, e.g. driving). Just make sure to ask what level of cover the umbrella is offering.

We also have a dedicated top 10 umbrella companies list which has providers offering a range of services, discounts and extras for contractors and freelancers. Every business in our top 10 is an FCSA accredited umbrella company.

Click here to see our top 10 umbrella companies!
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