Public liability for contractors: what is it?

Public liability insurance is one of the key insurances that most contractors have under their belt, so this probably isn’t the first time you’ve heard of it, but what exactly is it and why do contractors need it.

What is public liability insurance for contractors?

Public liability insurance is something a contractor might want to consider because, as a business owner, you are responsible for anyone who may be affected by actions you take while carrying out your work.

So, if you cause any accidental harm to people or property in the course of your work, damages are covered by your public liability insurance, as well as any legal fees you may incur as a consequence of defending any claims.

In short, public liability insurance allows you to go about your business while knowing that should anything go wrong, damages and legal fees are covered.

Example public liability claim

While it’s obvious how public liability cover applies to contractors who work among the general public, it’s perhaps less clear how it might apply to, say, an IT contractor. We have a example claim for you.

Ellie is an IT contractor working at a client’s office. She has a cup of tea on her desk and accidentally knocks it over. It pours down the back of a computer, destroying it. The client sues Ellie for the cost of a new machine and Ellie’s public liability insurance covers the costs.

How long does public liability cover last

This depends on your insurance, but public liability cover will often work on a “losses occurring” basis. This means you’ll be covered for claims relating to incidents that occurred during the period that the insurance was active. So even if your cover expires, you remain covered for the period of time you were insured for.

As an example, say you set yourself up as a contractor in 2017 and took out appropriate public liability insurance. In 2019 you are offered a position as an employee and you accept. Since you no longer require it, you don’t renew your contractor insurance – which includes public liability.

However, a few months later, another former client who you worked for in late-2018 while your insurance was still active, sues you for accidentally dropping and damaging some of their equipment during your contract. Because the incident happened during the period in which your insurance was active you would be able to make a claim, even though you no longer hold a policy.

This gives contractors peace of mind should they decide to change insurance providers or end their policy as it means there are no nasty surprises further down the line where you could find yourself uninsured.

Do contractors have to hold public liability insurance?

Technically, no, contractors don’t have to hold public liability. However, it is often stipulated in contracts (along with other insurances such as professional indemnity and employers’ liability), with clients or recruiters demanding contractors hold the cover up to a certain amount.

This is so clients don’t find themselves in a situation where they need to make a claim against a contractor and then the contractor cannot pay out, or declares themselves bankrupt – ultimately, it’s to cover both parties.

What this means is that if you don’t hold public liability cover, you could find yourself in breach of contract which could see your contract terminated, or even see you face legal action. Even if your contract doesn’t require it, it can be a good idea to hold it anyway to mitigate any financial risk to yourself.

Kingsbridge’s public liability insurance

Kingsbridge’s public liability insurance covers contractors for up to £5 million for any one claim and is unlimited in the aggregate. This means that you can make multiple claims for up to £5 million each, with no limits on how much you can claim overall.

It’s available as part of our package of contractor insurance, which includes:

• Public liability  insurance – £5 million any one claim (unlimited in the aggregate);
• Professional indemnity cover – £1 million any one claim (unlimited in the aggregate);
• Employers’ liability cover – £10 million any one claim (unlimited in the aggregate);
• Directors’ and officers’ liability insurance – £100,000 any one claim (and in the aggregate);
• Occupational personal accident cover – with a weekly benefit of up to £500 for up to 52 weeks; and personal accident, death and disablement cover up to £100,000.

Of course, if you need to be insured up to higher amounts, or cover pertinent to a specific industry sector, we can help adjust the package to suit your needs. To purchase cover, you can get a quote online or, for more information or to tailor the package, call our friendly, expert team on 01242 808740.