Why is insurance important for contractors?

Working as a contractor can provide a lot of freedom and variety, but it also comes with a great deal of responsibility. As a contractor, you are ultimately responsible for any mistakes, damages, or accidents that occur while working on a project. These risks can lead to high repair costs, equipment replacement, or even legal actions that can be costly.

Contractor insurance can help protect you and your business from these common risks and provide peace of mind while working with clients. By having the right insurance coverage, you can focus on providing quality services to your customers without worrying about unexpected expenses or lawsuits. If you're a contractor, it's crucial to protect yourself with contractor insurance. Accidents and incidents can happen on the job, and you don't want to be caught off guard without adequate coverage. Contractor insurance can provide peace of mind and financial protection in case of property damage, injuries, or lawsuits.

Are you aware that your clients may require you to have insurance? Some project contracts may specify minimum requirements for Public Liability and Professional Indemnity coverage. Furthermore, many clients demand that their contractors and subcontractors have professional indemnity and public liability insurance coverage. It's important to review the contract before starting a job to determine if you need to fulfil any insurance requirements.

As a contractor or subcontractor, you work with a diverse range of clients. However, unlike employees, you may not have complete insurance coverage through your client while working for them.

Professional Indemnity Insurance for Contractors

Professional Indemnity (PI) insurance is crucial for contractors who provide specialized services or expert advice. It covers claims made against your company for damages resulting from negligent acts or omissions during the delivery of your expert assistance or guidance.

PI Insurance also assists in covering the costs of managing or responding to claims that are covered by the policy. Acts of professional misconduct that are covered by this insurance include giving incorrect advice, breaching the duty of privacy and confidentiality, slander, defamation or libel, losing or destroying papers, intellectual property infringement, and bodily harm or illness resulting from your services.

Your policy can assist you in paying for expenses related to representing yourself in court, such as legal fees and travel expenses. It might also cover the costs of investigating the claim and handling public relations for your company.

However, there are certain exclusions to professional indemnity policies, which typically include:

  • Unintentional harm
  • Fraud and dishonesty in action
  • Accidental harm and material loss
  • Any claims or situations that were known before the insurance period

Public Liability

Public Liability insurance is intended to protect you and your company in the event that one of your clients, partners, or members of the general public sustains an injury (which is not covered by the Accident Compensation Commission (ACC)) or damages property as a result of your careless business practices.

As a contractor, you might meet or work with clients in a variety of settings, including your office, their place of business, a job site, or another location. Anywhere you work, your public liability insurance protects you from claims of personal injury and property damage.

The following is often covered by public liability insurance:

  • Third-party personal injury sustained by a client, customer, supplier, or member of the general public
  • Property damage to third parties brought on by your careless business practices
  • Costs associated with defending against a claim that is covered.

Typically, a public liability insurance policy excludes the following coverage:

  • Injuries to you or your employees
  • Damage to your own property
  • Advertising damage
  • Costs associated with repairing poor workmanship
  • Claims arising from criminal activity or professional negligence
  • Recklessness or willful carelessness
  • Contractual obligations
  • Asbestos pollution
  • Events that occur outside of the policy period

Protect your contracting or subcontracting business by securing it with a Business Insurance package. This bundle of insurance can cover your inventory, equipment, buildings, portable equipment, and income losses due to business interruption caused by insured occurrences like fire, storm, theft, or unintentional damage.

Note that this material is generic in nature and does not consider your specific aims, financial condition, or needs. You should not rely on it as advice. The terms, conditions, and exclusions specified in the policy wording will apply to the coverage, as with any insurance.