Public liability insurance for contractors – what does it cover?

If you carry out your contract work on client sites, or clients visit your own premises, then you should consider taking out public liability insurance to cover your company in the event that a claim is made against you for damage to equipment / property, or injuries to third parties you have caused.

What is public liability (PL) insurance?

Your company will be covered in a wide number of scenarios, if you’re found to be responsible for damaging property, or for personal injuries caused as a result of your actions.

For a typical IT contractor, who provides services on third party sites, example scenarios include:

• You’re wiring up a new server, but fail to allow enough space to work within, and damage some surrounding equipment while completing the job.
• You rent a small office to undertake a variety of coding jobs, and you arrange a meeting with a client at your premises. Before leaving the meeting, the client finds himself at the wrong end of some poorly stacked storage boxes and injures his arm.

Why would a contractor need public liability insurance?

Unlike Employers’ liability insurance which is mandatory (if you have employees), there’s no legal obligation to take out PL insurance. However, there are several compelling reasons why you should do so:

• You client may insist that your company is ‘adequately insured’ – which will often mean that you have sufficient Professional Indemnity (PI) and Business Liability cover.
• If you’re taking out PI cover (which is always a good idea if you’re providing specialist services to clients), insurers will often provide business liability (which includes public and employees’ liability) for a modest extra fee – perhaps just £50.
• If you do hire other people to work for your company, then they could be responsible for actions which result in a public liability claim against your business, so you should take out a policy if you have employees.
• Ultimately, you will have the piece of mind that in the unlikely event that a claim is made against you, you are covered for the costs of defending the claim, together with any damages. And the cost of cover is inexpensive.

Things to look out for when comparing quotes

• Specialist insurers will typically provide £1m of PL cover, which can be increased to £5m or even £10m. A required limit may also be specified by your client as a condition of the contract.
• You’ll usually find PL bundled with EL (Employers’ Liability) cover – and typically included as an option when you apply for a Professional Insurance policy. By buying all three policies together, you will save money compared to buying standalone policies.
• You can take out a PL policy on a standalone basis if you don’t need EL cover – but check the total costs of all your combined quotes, as – once again – a ‘package’ may be cheaper.

How to get a quote

For further information, and to get a quote, visit our long-term insurance partner, Hiscox.