Contractor Insurance Costs

There are a number of different types of contractor insurance and the costs of these can vary considerably.

The cost of premiums for contractor insurance will depend on the type/nature of business, your contractor business turnover and the number of employees within your business.

The contractor insurance prices quoted will increase due to the higher level of risk associated with your contractor business, its turnover and number of employees and the level of cover required.

Greater cover limits will increase premium costs
Higher business turnover attracts greater premiums
More employees will increase cover costs

However different types of contractor insurance, are affected in different ways, by the above variations. The main types of freelance contractor insurance are employers liability insurance, public liability insurance and professional indemnity insurance.

Employers liability cover for contractor businesses is generally offered at a level of up to £5 million to £10 million per claim in any one period of insurance. As the level of cover tends to be for a fixed standard limit, the main variation of costs for employers liability Insurance tends to be based on the number of employees – the more employees, the higher the risk and subsequent costs.

Public liability cover for contractor businesses is offered at varying levels, typically from £1 million to £5 million per claim in any one period of insurance. The main trigger for increased contractor public liability insurance costs is the limit of cover selected – the higher the level of cover, the higher potential payout the insurers may have to make – therefore the higher the costs.

Employers liability and public liability insurance are usually offered as a combined insurance package, often also linked with office contents, portable equipment, business interruption and directors & officers insurance cover, with the limits of each of these insurances influencing the overall costs.

Professional indemnity cover for contractor businesses is once again typically offered at varying levels – from £100,000 up to £2 million, sometimes higher, if a specific contract dictates a higher limit is required. The costs of contractor professional indemnity insurance are impacted by the level of cover required – the higher the limit, the higher the cost, but also significantly by the turnover of the contractor business, as premiums are calculated as a percentage of contractor business turnover.

How much insurance cover does a contractor business need?

The amount of cover required by your contractor business will vary, depending on the type, size and turnover of your business.

The level of employers liability cover required is dictated in law at a minimum £5 million per claim, so all insurance packages available will offer a minimum of this level.

The required levels for public liability insurance and professional indemnity insurance, will quite often be dictated by the contracts your contractor business enters into, with certain professions, such as IT and architecture requiring significantly higher levels of cover than other sectors.

When considering the types and levels of contractor insurance cover to purchase, it is wise to conduct an impact assessment of your contractor business; to assess what the effect on your business would be if the worst were to happen. This should give an idea of how important to your particular contractor business the varying types of insurance cover are.

Also be aware that, as in all walks of life and business, the cheapest is not always the best, ensure that you check the small print to make sure that you are getting the insurance cover you require and that your business’s particular circumstances are not excluded in the small print.

And finally, before making any decisions, remember the old adage, decide in haste - repent at leisure! Insurance is a very important element in protecting both your contractor business and yourself from unforeseen circumstances, so it makes sense to make sure that you have the insurance cover your business needs to give you the protection you need.