O/T Limited Company Indemnity Insurance

[BlueTusk]

I guess there are (or were till job market went pear shaped) plenty of IT contractors on here. Anybody have Employers and Public Liability Insurance.?

If so is it worth while (good for IR35 avoidance?), how much and who do you recommend/use.

Best I've had was through a broker at 350ukp. A bit steep I thought.

Thanks.

[CarZee]

Best I've had was through a broker at 350ukp. A bit steep I thought.

Depends on what level of cover and who your clients are I guess?

If you feel you need it, get it, but it's not worth it just as an IR35 avoidance measure.. there's plenty of case history allowing you to get round IR35 now without resorting to this sort of thing..

I'm sure you know this already but check www.contractoruk.com and www.namesfacesplaces.com

[Graham]

i get mine as part of the office insurance...

tolson messenger

[samn01]

It is a legal req for all Ltd companies to have PL I can tell you that much.

[tonybav]

Yep its a legal requirement.

[PetrolTed]

300 odd quid is similar to what I pay.

[mrsd]

Yep, requirement. The IR take a dim view of trying to use it for IR35 avoidance as well At least yours isn't £22k PA

[Size Nine Elm]

samn01 said: It is a legal req for all Ltd companies to have PL I can tell you that much.

Its a requirement for Employer's Liability insurance. PL is an option offered by many policies.

We have a bundled policy including Emp. Liability, Public Liability, office cover all in one.

Company of 10 people, £540 for a year.

[ninja_eli]

I pay £14K per annum for insurance but that covers all aspects, but excludes legal expenses cover, which is done through DAS for £180 per annum. Covers most disputes.

£300 seems okay. I heard a friend paid something like £180 for PL cover. Will ask him full details and let you know.

[CarZee]

I'm slightly embarassed to confess that as the owner of a Ltd Co for 18 months, no advice I have sought ever brought this apparent requirement to light...

FWIW It's basically a Personal Service Company.. ie I'm an IT contractor with no commercial premises an I'm the owner/director - only because of IR35 could I possibly be considered an employee in any way.

Can anyone tell me definitively where I stand?

[eric mc]

I'm not convinced that there is any LEGAL requirement for Ltd companies to have Professional Indemnity Insurance. Some industry and professional bodies insist on their members having such cover (I do as an accountant for example). It may be a good thing to have, however, purely from a "peace of mind" point of view.

IR35 - IR35 states that an "intermediary entity" (eg Ltd Co. or partnership) cannot be used to prevent the payment of PAYE and Class 1 National Insurance in situations where the individual, trading through his company or partnership, would otherwise have been treated as an employee. Every individual contract should be reviewed with IR35 in mind. It is entirely feasable that a "personal service company" might be working two or more contracts at any given time, some which may fall foul of IER35 and some which may not.

The consequences of IR35 can be avoided if the terms of the contract can be arranged to show that the relationship between the main contractor and the personal service company is of a trading nature rather than that of an employer/employee relationship. To be able to demonstrate trading, a number of "badges of trade" should be obvious in the terms of contract. These are things such as:
- own control over determination of length of working hours
- ability to hire substitute labour when necessary
- provision of own tools and equipment
- multiplicity of contracts/customers/clients
- VAT registration
- provision of own insurance cover
- no entitlement to holiday or sick pay
- no entitlement to benefits offered by "employer" (eg access to share schemes/medical insurance/child care facilities etc).

There are a few more that I can't think of right now. If in doubt about whether a contract falls under IR35 or not, the Inland Revenue are happy (of course) to review the terms of the contract and make a judgement. In fact, this course of action is recommended by the tax authorities.

[JonRB]

I have had several contracts with clients that have explicitly stated that my company must carry PI and PL insurance. I guess its so that if I fall over and break my leg on their premises then they don't have to shell out as I'll be covered under my company's policy.

I have PI, PL and EL for somewhere in the mid-to-high £200's (I forget the exact figure, even though I only wrote the cheque for the renewal a day or so ago!) and I got it through the PCG (www.pcg.org.uk)

It is a good pointer to being in business on your own account, as employees do not need insurance like this. However, it is probably not worth taking out solely as a guard against IR35 although it would certainly strengthen your case to have it.

[dern]

CarZee said: I'm slightly embarassed to confess that as the owner of a Ltd Co for 18 months, no advice I have sought ever brought this apparent requirement to light...

FWIW It's basically a Personal Service Company.. ie I'm an IT contractor with no commercial premises an I'm the owner/director - only because of IR35 could I possibly be considered an employee in any way.

Can anyone tell me definitively where I stand?

I've been doing this for 6 years and I've never had any. It's always been my understanding from talking to whatever agency I'm with that the agency provides basic public liability insurance but I don't know if that's the case for my current contract. What sort of thing does it cover? Is it as basic as covering you if someone sues you after tripping over your laptop or covering you if your software goes t*ts up?

Mark

[tonybav]

Sorry my posting below proves i did not read the question every limited company with an employee, that includes contactors where the owner is the only employee, must have employers liability insurance. This is nothing to do with tax law but health and safety legislation.

Most policies include public liability at little extra cost.

[eric mc]

Professional Indemnity Insurance (PII) has nothing to do with Employer Libility Insurance or the more general Public Liability Insurance. PII is essentially cover to ensure that you can meet any claims brought against you or your firm for negligent or inaccurate advice given your supposed professional qualifications and experience. It would also cover claims for general poor workmanship if applicable. It is not normally a LEGAL rquirement to have PII but it is usually insisted upon by the individual's professional association. For example, a firm of accountants operating without PII would be fined heavily by their Institute and, if PII was not taken out subsequently, their practising license would be withdrawn and eventually the individual partners might be excluded from memebership of the Institute.

[Size Nine Elm]

JonRB said: I have had several contracts with clients that have explicitly stated that my company must carry PI and PL insurance. I guess its so that if I fall over and break my leg on their premises then they don't have to shell out as I'll be covered under my company's policy.

Public liability is so that if someone falls over your leg while you're on someone's site, you are covered...

Not edited. Ever. Oh no. Its a lie. I can spell.

>> Edited by Size Nine Elm on Thursday 27th March 15:30

[BlueTusk]

Thanks for the replies.. Glad to see I'm not the only one who has ignored the issue for several years.

How many contractors are members of PCG.? Is it worth joining.?

cheers,

Paul.

>> Edited by BlueTusk on Friday 28th March 15:42

[JonRB]

It's worth becoming a member simply for the free Tax Investigation Insurance if nothing else!