As with most other businesses, a contractor will invariably deal with the public at some point in their day to day activities. This might be a simple interaction with someone, or it might be someone coming to visit you at your place of business. Either way, if something happens that causes injury or damages to that person at that moment, you and your business could be held liable. If that happens, then it is essential that you have your business covered by public liability insurance because any sort of claim, no matter whether genuine or malicious, could end up costing you a small fortune. Public Liability Insurance is for those moments when accidents happen despite your best intentions and despite all the precautions your business has put in place.
Many contractors will of course wonder whether they need it as they might not see themselves as operating in the same way as most businesses. But despite working alone as a contractor, the same rules apply to you. If anyone is hurt as a result of your activities (directly or indirectly) or any of their property is damaged, whether on your place of business or your client’s premises then you are liable for compensation. This might mean that even if you work from home or online and don’t have people come to your ‘office’ if you were to damage something by accident when you visit a client’s office you could face a claim. Similarly, if you hire someone else to help you fulfill a contract, even in a one-off, temporary contracting basis and they injure someone or something, you will likely face a claim. Often the claim will be for something very minor, but in the age of no-win, no-fee the number of people making such claims is increasing. That is why many of your clients will insist that, like Professional Indemnity Insurance, you have up to date Public Liability Insurance before they take you on as a contractor.
So what does Public Liability Insurance actually cover? As mentioned above, it covers you and your business for damages to the person or property while working as a freelance contractor. That could be anything from a client slipping over in your office to you spilling hot tea on your client and from breaking some equipment in their office or even deleting some of their files by mistake. When it comes to Public Liability Insurance, it is not required by law that a contractor maintains a certain level. However, most contractors will normally opt to carry a minimum of £5 million in order to offer adequate compliance to their clients and employment agencies. Normally they will also opt for a better value policy that combines Public Liability Insurance with Employers Liability Insurance, known as Contractor Liability Insurance.
John Yerou is a pioneer of contractor mortgages and owner and founder of Freelancer Financials, Contractor Mortgages®, C&F Mortgages and Self Employed Mortgages, trading styles and brands of the award-winning Mortgage Quest Ltd.