Contracting under an Umbrella Company - PI cover

[donna180]

Hi,

If I take a contract and work under an Umbrealla Company (IT sector), do I need to take out Professional Indemnity Insurance or am I classified as an Umbrella Company Worker. The Umbrella Company I'm thinking of, advertise that Contractors are covered by their own insurance so I'm thinking, it looks fairly safe from a liability perspective, however a friend has mentioned that I should opt for setting up a limited company, as my liability would be limited as a director.

If anyone thinks I should take out PII, any recommendations would be most welcome.

Thanks,
Donna

[Fatman2]

I think you may need to do a bit more research into what is going to be best for you (Ed may be able to give you more professional advice on this) but some accountants, like Brookson, have websites with lots of info.

The decision to go umbrella or Ltd is generally dependent on whether you see contracting as a short/long term thing. Going umbrella is the simplest thing to do but you may earn less than if you were to go Ltd. However setting up as a Ltd company involves some paperwork and regular maintenance i.e. more paperwork.

I'm Ltd and don't have PI but the IT industry may well be different.

[donna180]

Thanks. Ignoring the short/long term, and the differences in net income from either vehicle, I'm purely interested in whether you're more or less liable for professional advice, if you work for an umbrealla, in the unlikely event of something going wrong, and whether PII would be worthwhile.

(I would have posted in the legal section but have to wait before I can post there. )

[Fatman2]

Sorry

There is some advice here but is not comparing umbrella with Ltd (I thought umbrella services covered you for this anyway):

http://forums.contractoruk.com/business-contracts/...

http://forums.contractoruk.com/welcome-faqs/57760-...

Returning to the old umbrella vs ltd thing, all I can add is that if you do decide to get PI cover then you will at least be able to pay for it with the savings you make by going ltd (about £300pa).