Specialist insurances and IR35 advice
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Professional indemnity (PI) insurance is the main insurance required by a wide range of roles undertaken by contractors, freelancers and consultants. It is designed to provide cover for legal representation and damages arising from claims made against your company in respect of errors and omissions as a result of providing your professional services. Contractors without professional indemnity insurance may find it difficult to commence a contract with an end client who, oftentimes, will want proof that a minimum limit of indemnity of £1m is in place. Contactors are also often under the impression that they’re covered by the professional indemnity insurance of whichever agency they’re currently providing services through; in most cases, they aren’t, leaving them open to professional indemnity claims. In short, professional indemnity insurance is essential for contractors.
We’ve curated a set of professional indemnity guides to provide advice on how much cover you need, comprehensive explanations of terminology and situational examples to help you tailor your business protection. Being your own boss means being directly responsible for any errors or omissions you make – use our Knowledge Hub to do your research.
Our professional indemnity (PI) product is one of the best, if not the best on the market for the trades we cover and the price we charge. Premiums start at just £144.00 (inclusive of Insurance Premium Tax) and cover can be extended to include retroactive cover for a small additional amount. In addition, the excess payable in the event of a claim can reduced from £500 to £0 (Non IT & Technology trades only). Our policies are underwritten by some of the largest insurers in the world and have claims handled by top UK legal firms, meaning that our professional indemnity insurance offering is as good as they come.
Our fully comprehensive policy offers the
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|We'll give you an overall inside/outside IR35 opinion regarding your contract as a whole, including a comprehensive list of essential changes (if any need to be made). We'll also recommend a list of insurances tailored to you and offer guidance on any applicable legislation.
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|Our Head of Tax, Andy Vessey, is widely recognised as one of the UK’s foremost IR35 experts, having personally and successfully defended more than 500 HMRC IR35 investigations. His expertise is accessible for all clients of Larsen Howie.
Tailored for Contractors, Consultants and Freelancers
|The beauty of contracting is that each end client, contract and project is different from day to day, and a cookie-cutter review doesn't do your contract justice. We approach each contract review as a unique document, so you get tailored recommendations and as accurate an opinion as possible.
Anyone who provides advice, designs, or services is likely to be contractually required to have PI in place. Incorrect advice or omissions can be a costly error with large ramifications, often financial, leading to claims being made by the end client or a third party.
PI assists your business by protecting it from the financial costs of both legal representation and liabilities associated with negligence such as errors and omissions in the provision of your services. These costs can often run into the hundreds of thousands of pounds, and a legal case can be brought on just an allegation – even if you have done nothing wrong, you would still have to front these costs to defend yourself. By holding PI, you are also providing the end client with the reassurance that you’re covered in the unlikely event of the worst happening, increasing the possibility of you landing the contract as a result.
As a business, taking out PI could actually improve your IR35 position. Insuring yourself against professional indemnity claims acts as a clear indicator that you are a genuine business that takes sole financial responsibility for rectifying errors or omissions, as opposed to an employee who would be covered by their employer.
Typically, a £1m (£1,000,000) limit of indemnity is required, with other common limits being £2m and £5m. Limits do range from £50,000 up to £5,000,000, but ultimately it is up to the contractual requirement placed upon your business and the maximum financial loss your client could suffer due to a mistake you make. If the level of cover taken out is not sufficient for your requirements, then you will be liable for the remaining amount, which can be significant. More often than not, the agency will specify the limit of indemnity required; with premiums starting at £144.44 (inclusive of Insurance Premium Tax), the cost pales into insignificance given the protection provided.
This covers your work on previous contracts, providing you are not aware of any issues with your work that could lead to a claim being made against you, and that uninterrupted cover has been in place up to this point. Retroactive cover is available for all our trades, where it can be purchased for an additional premium at the point of sale.
This is a common mistake made by many contractors. By cancelling the insurance when the contract ends - say maybe in the knowledge that you are taking a well-earned month-long holiday in between contracts - you risk putting your company in the position of being uninsured at the point a claim is made. A PI insurance policy is what is known as a ‘claims made’ policy, meaning that it pays out for a claim made during the policy period. In short, you need to have the insurance in place when you receive notification of the claim being made against you - cancelling the policy early puts you at risk of being uninsured when a claim is made.
If you are working in very similar roles across your clients, then you should be ok with the one policy. However, you will need to check the policy documents with your broker to ensure that this is the case - different roles can result in different policies being issued, and a different price being charged. Our policies do provide for this, on the condition that you’re doing the same job role, but it’s best to check that you’re fully covered before taking out insurance.
The same answer as above applies here: if you’re working in very similar roles across your clients, you should be ok. However, you will need to check the policy documents with your broker to ensure that you’re sufficiently covered, and are paying to right premium on your policy.
This depends on the policy taken out - some providers of PI insurance include it as standard, others do not. You should check your policy with your broker and insure yourself accordingly. We provide this cover as standard with all our PI policies.
Unfortunately not. Most PI insurances provide cover on a worldwide basis, excluding North America, Canada, and Mexico. If you take up a contract with an end client operating in North America, then you will need to ensure you have a PI insurance policy that specifically extends to that region, or take out a separate policy specific to that region.
Examples of what PI insurance can cover includes:
- A software programmer’s coding results in unexpected downtime on the main system, taking it wholly offline and with a large financial cost to the end client.
- A management consultant’s recommendations on costs savings and efficiencies on a project actually increase the costs incurred by the end client.
If you do receive the dreaded letter or call from the end client or a solicitor alleging professional negligence against your company, don’t panic. Upon taking out your insurance, you will have been issued with a policy wording, a policy summary, and a policy schedule. Within these documents will be clearly highlighted sections on how to make a claim, including contact details and the next steps. Remember, the sooner you let your insurer know of a claim the better - if in doubt, contact them and they can advise you what to do. Visit our Claims page to ascertain the contact details of the claims handler.
There are numerous best practices that can assist you in risk managing down and minimising the chances of a claim occurring, the best being:
- Make sure you have an active policy in place, don’t leave yourself uninsured!
- Read and understand your contract in full, ensuring you retain copies of them.
- Ensure before taking up a contract you are capable of delivering the required end result.
- Get sign off on the completion of each milestone on the project.
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