An IT contractor working through a limited company meets the insurance question on the first day of onboarding, usually as three lines in an agency's contract naming professional indemnity, public liability and employers' liability with a limit beside each. Understanding what each one is for, and which of the three a single director company actually needs, saves both money and the week it takes to sort out at the start of an engagement.
The three lines in an agency contract
Professional indemnity answers for the client's financial loss from your work and is the one that matters: a failed migration, a system that did not do what the statement of work promised, a data loss. Public liability answers for injury and damage on the client's site. Employers' liability is compulsory once anybody is employed, and a company whose only employee is a director holding at least half the issued share capital is generally exempt, though agencies often require it anyway as a contractual term.
The limits, and who sets them
The contract sets them and one, two and five million pounds are the usual figures, with the larger end clients and public sector frameworks asking for the higher ones. The requirement frequently extends beyond the engagement: a clause requiring cover to be maintained for years after completion is common, and it is the reason a contractor between engagements should keep the policy live rather than cancel it.
Claims made, and the gap between contracts
Professional indemnity answers for claims made while the policy is in force, whatever year the work was done. A contractor who finishes a six month engagement, cancels the policy and starts another one in March has no cover at all for the work already delivered. Continuous cover, with the retroactive date reaching back to the first policy, is what keeps the finished work insured, and run off cover is the version of that for somebody leaving contracting.
Cyber, and the policy in the client's own contract
Where you hold client data or touch production systems, a compromise in your own environment is a cyber claim rather than a professional indemnity one, and client contracts increasingly name it separately with its own limit. Some also require a security standard such as Cyber Essentials. Both are cheaper to arrange before the contract is signed than after it has been sent back for amendment.
Questions people ask about it contractor insurance uk
What insurance does a UK IT contractor need?
Professional indemnity at the limit the contract names, public liability for client site access, and employers' liability where anybody is employed. Cyber cover is increasingly required by name where the contractor holds client data or touches production systems.
Does a single director limited company need employers' liability?
Generally the exemption applies where the only employee is a director owning at least half the issued share capital. Agencies frequently require the cover anyway as a contract term, so check the exemption against your shareholding and the contract wording.
What limits do agencies ask for?
One, two or five million pounds, depending on the end client. Public sector frameworks and large corporates ask for the higher figures and often require the cover to be maintained for years after the engagement ends.
Can I cancel between contracts?
Not without leaving the finished work uninsured, because professional indemnity answers for claims made while the policy is live. Keeping it continuous, with the retroactive date reaching back, is what protects work already delivered.