Independent Consultant & Contractor Insurance
An independent consultant working through their own company does not choose their insurance in the way a practice does. Client contracts commonly specify required covers and limits, the client or the agency presents that contract, and the engagement does not start until the certificates are produced.
That is the whole character of this exposure. The question is rarely what a sensible level of cover would be; it is what the contract demands, which is frequently professional indemnity, public liability and employers' liability at set figures even where the consultant works alone at a desk.
The contract can also create liabilities well beyond negligence. Indemnity clauses, obligations to insure the client's interest, and uncapped liability appear routinely in agency paperwork drafted for a much larger supplier, and the consultant may assume contractual obligations beyond the protection available under their insurance.
We can advise independent consultants and contractors on cover that satisfies the contracts they are asked to sign, and identify the clauses that ask for something no policy will provide.
Common claims and risk exposures
The exposures that produce claims in this trade, rather than a generic list.
The contract sets the cover
Agency and end client contracts specify covers and limits, and they are usually non negotiable. A consultant discovering at the last minute that £2m of professional indemnity is required either buys it or loses the engagement.
Indemnity clauses and uncapped liability
Contracts drafted for large suppliers often include broad indemnities and no liability cap. Signed by a one person company, they create obligations far beyond anything the individual could meet or insure.
Working inside a client's team
An independent contractor takes direction from the client and delivers alongside their staff, which makes it hard to separate their error from the team's. Defending a claim in that setting depends on records the consultant may not control.
Employers' liability when there are no employees
Many contracts require employers' liability cover regardless of whether anyone is employed. A single director company with no other staff is often outside the legal requirement, but the contract still asks for the certificate.
Gaps between engagements
The temptation to lapse cover between contracts is the most damaging mistake in this class. Professional indemnity is claims made, so a claim arriving during an uninsured gap has nothing to answer it, even for work done while insured.
The cover we arrange
We arrange professional indemnity and related insurance around the services you provide, the clients you work with and the contractual requirements you face. The appropriate cover and limits will depend on your individual activities and the terms available from insurers.
Professional indemnity
Claims arising from negligent advice, work or deliverables. The limit is usually dictated by the contract rather than chosen, and £1m or £2m is commonly specified.
- Negligent work and advice
- Limit set by the contract
- Claims made basis
- Continuous cover matters most
Public liability
Injury to others and damage to property, including damage to a client's premises and equipment while working there. Commonly required at £1m, £2m or £5m depending on the site.
- Injury to third parties
- Damage to client property
- Required for site access
- Limit set by the contract
Employers' liability
Legally required once anybody is employed, and frequently required by contract even where it is not legally needed. The certificate is often part of the onboarding pack.
- Legally required with employees
- Often required by contract regardless
- Statutory minimum limit
- Certificate needed for onboarding
Cyber and equipment
Client data held on the consultant's own laptop, and the equipment itself. Working across several clients' systems from one machine concentrates the exposure on a device nobody else manages.
- Client data on your own devices
- Laptop and equipment cover
- Ransomware and restoration
- Breach notification
Run off
Cover continuing after the company stops trading, which is a real question for contractors who return to employment. The claims made trigger does not care that you no longer contract.
- Continues after you stop contracting
- Relevant when returning to employment
- Cheaper than a live policy
- Arrange before the last renewal lapses
What an underwriter will ask
Having these to hand shortens the process considerably, and usually improves the terms.
- The discipline you contract in, and the sectors you work in
- Annual income through the company
- Covers and limits your current and recent contracts require
- Whether you work at client sites or remotely
- Whether you engage any subcontractors or associates
- Whether contracts are signed as presented or negotiated
- Whether any contract requires cover to continue after the engagement ends
- Claims and notified circumstances over the last six years
What affects the cost of your insurance?
The main factors insurers consider when assessing the premium.
Discipline rather than income
An IT contractor, a management consultant and an engineering contractor at the same income are rated very differently, because the size of the loss they could cause differs.
Limits the contracts demand
Premium follows the limit, and the limit follows the contract. It is worth checking requirements across your typical engagements rather than buying for the largest one you have ever seen.
Site working
Physical presence on industrial or construction sites raises the public liability requirement and the rating with it, compared with entirely remote delivery.
Continuity
An unbroken record with the same retroactive date is worth real money at renewal, and rebuilding it after a lapse is not possible.
Conditions and exclusions to consider
Terms vary between insurers, so treat these as the questions to ask rather than a description of any one policy.
Liabilities assumed by contract
An indemnity accepted in a contract is not automatically insured. The policy responds to negligence, so an uncapped or non fault obligation sits with the company, and behind it the director.
Work outside the declared activity
A policy written for one discipline may not answer a claim arising from something quite different taken on for a good client. Tell your insurer when the work changes.
Gaps in cover
A lapse of even a few weeks leaves claims notified in that window uninsured. It is a common and highly avoidable failure among independent consultants.
Employment status and tax
IR35 and employment status determinations are not insurable events under these policies. Legal expenses or a specialist status product is a separate consideration.
Common questions
The agency wants employers' liability and I have no employees. Why?
Because their contract template asks every supplier for the same three certificates. You are often outside the legal requirement as a sole director with no other staff, but the contract is a commercial condition rather than a legal one, and the engagement will not start without it.
Can I cancel between contracts to save money?
It is the most expensive saving available in this class. Professional indemnity responds when a claim is made, so a claim about last year's work arriving during a lapse is entirely uninsured, and starting a new policy afterwards will not reach back to cover it.
The contract has an uncapped indemnity. What do I do?
Ask for a cap, ideally at the level of your professional indemnity limit, and for the indemnity to be limited to your negligence. Many agencies will agree when asked, and if they will not, you are accepting a personal exposure your policy does not answer rather than a technicality.
What limits do contractors usually need?
Most contracts land on £1m or £2m professional indemnity, £2m to £5m public liability and the statutory figure for employers' liability. Check your own contracts rather than assuming, since public sector and financial services clients often specify higher.
How do I get a quote from True Risk Solutions?
Call 01304 262880 and speak to a broker, or email info@truerisksolutions.co.uk with what you do, what you need cover for and a phone number with the best time to call, and a broker will call you back. We need a phone number to quote, because the cover and the price depend on questions that are quicker to answer on a call than by email.
Speak to a specialist who understands your industry
Tell us about your business and the work you undertake, and we will come back to you with cover options built around it. Call 01304 262880, or email us with a phone number and the best time to call and a broker will ring you back.