Working as a self-employed contractor in the UK can offer flexibility and independence, but it may also bring a range of responsibilities. One of the most important considerations is whether Employers’ Liability Insurance or Professional Indemnity Insurance could be required or beneficial for the type of work carried out.
Understanding the purpose of each type of cover and when they might apply is essential for protecting both the contractor and the clients they serve.
What Is Employers’ Liability Insurance?
Employers’ Liability Insurance is typically designed to cover businesses against claims from employees who suffer illness or injury as a result of their work. In the UK, this insurance is usually a legal requirement for businesses that employ staff, even on a part-time or casual basis.
When Could Employers’ Liability Insurance Be Required?
A self-employed contractor might need to consider Employers’ Liability Insurance if they:
- Hire employees, apprentices, or trainees
- Employ temporary staff or subcontractors under direct supervision
- Use labour-only subcontractors who are treated as part of the workforce
It is important to carefully assess working arrangements. In some cases, the legal responsibility for Employers’ Liability Insurance may depend on the nature of the employment relationship. Even if individuals are hired on a short-term or voluntary basis, appropriate cover may be necessary.
Many clients or contracts may also request proof of Employers’ Liability Insurance before work can begin, especially on large-scale projects or public sector contracts.
What Is Professional Indemnity Insurance?
Professional Indemnity Insurance can protect self-employed contractors and businesses that provide professional advice, designs, or services. It is often considered essential in industries where clients rely on specialist expertise.
What Can Professional Indemnity Insurance Cover?
Professional Indemnity Insurance typically may include:
- Claims for financial loss caused by alleged professional mistakes
- Errors or omissions in work or advice provided
- Unintentional breaches of confidentiality
- Legal costs associated with defending a claim
For example, if a contractor provides design advice that leads to a costly mistake, the client may seek compensation. Professional Indemnity Insurance can help cover the legal expenses and any potential settlement amounts.
Do Self‑Employed Contractors Need Employers’ Liability or Professional Indemnity Insurance?
Whether a self-employed contractor may need either type of insurance depends on the nature of their work, the structure of their business, and who else is involved.
Scenarios Where Employers’ Liability Could Be Considered:
- Contractors employing staff, even part-time
- Businesses with apprentices or volunteers
- Contracts requiring on-site workers under the contractor’s direction
Scenarios Where Professional Indemnity Could Be Valuable:
- Providing consultancy or professional advice
- Producing designs, calculations, or specifications
- Offering specialist knowledge that clients rely upon
Certain professional bodies, regulators, or contracts may also require Professional Indemnity Insurance as a condition of membership or engagement.
Additional Insurance Contractors May Wish to Consider
Beyond Employers’ Liability and Professional Indemnity, self-employed contractors could explore other types of business insurance to strengthen their protection.
Public Liability Insurance
Often seen as a key policy for contractors who interact with the public or work on client sites, Public Liability Insurance can help cover claims for third-party injury or property damage.
Tool and Equipment Insurance
For contractors who rely on valuable tools, this cover can offer protection against theft, loss, or accidental damage.
Personal Accident Insurance
This type of insurance can provide financial support if the contractor suffers an injury that prevents them from working.
Arranging the right combination of cover can offer more comprehensive protection and may help contractors meet client expectations and legal obligations.
Key Points to Remember
Choosing between Employers’ Liability Insurance and Professional Indemnity Insurance depends on the individual circumstances of each self-employed contractor. If employees, apprentices, or supervised subcontractors are involved, Employers’ Liability Insurance could be essential. For those providing professional advice, consultancy, or specialist services, Professional Indemnity Insurance may offer valuable protection.
Working with a broker can help contractors explore the available options and arrange insurance that is tailored to their specific needs and working environment.