Insurance cover for contractors is crucial as it guards against potential financial losses. In certain industries, having the correct insurance is a prerequisite for securing contracts. Find out how to protect yourself.
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Buying Insurance — Sorted
Cover to think about
The insurance requirements vary based on your industry and specific activities. Consult an insurance broker to determine the most suitable coverage for your situation. Here are some insurance types you can inquire about.
Liability insurance
This insurance provides protection in case someone files a lawsuit against you or one of your employees for damaging their property or reputation. It also offers coverage in the following situations:
- Accidentally breaking the law and facing fines or needing to defend your actions.
- Making an unintentional professional mistake, such as providing faulty advice.
- Being sued in your capacity as a business director.
This type of insurance is crucial if you work in an advisory role, like a consultant. It is also advisable if your activities have the potential to cause damage to others’ buildings, equipment, or belongings, such as when you are a tenant, cleaner, painter or decorator.
Various liability policies are available, and the most suitable one depends on the nature of your work.
In general, liability policies typically cover:
- Compensation costs, which include the amount you would have to pay to the suing organisation if their case is successful.
- Legal costs.
- Other expenses incurred while defending your case, such as investigative reports necessary for your defence.
Business interruption insurance
This insurance provides coverage for financial losses that occur when you are unable to conduct business following a natural disaster, such as a fire, flood, or other insured event. It also offers protection for additional expenses you may incur to keep your business operational in the aftermath of a natural disaster.
Continuity and contingency planning
Commercial building insurance
Commercial building insurance provides coverage for damage to buildings that you own, such as those caused by fire, flood, earthquake, or other insured events. It’s important to note that if you use your home for commercial purposes, your home and contents insurance may not offer adequate coverage. Therefore, it is advisable to review your home and contents policy if you utilise your home for work.
Asset Insurance
Asset insurance safeguards the items you own and utilises for contracting purposes, including tools, equipment, computers, furniture, and stock, from risks such as theft and accidental damage. It is crucial to have a clear understanding of the coverage provided by your policy. There are two primary types of claim settlements available:
- Replacement: This is the most common settlement basis, where the policy covers the complete costs of replacing or repairing an item.
- Indemnity: This settlement basis factors in wear, tear, and depreciation when reimbursing your claim.
Common business assets checklist
Commercial vehicle insurance
If you use a vehicle for work purposes, it may be necessary to obtain a commercial vehicle insurance policy.
Cyber Insurance
Computer hacks can lead to the loss of customer data, including private information and debtor lists. Cyber insurance provides coverage for expenses associated with data restoration, engaging external IT experts for recovery, replacing compromised computers, loss of income during business interruption, and financial liability towards customers.
Transit insurance
This insurance provides coverage in the event that your equipment or stock is damaged while being transported by either yourself or a freight company.
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