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Newbie - Do I really need PI/PL insurance

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    Newbie - Do I really need PI/PL insurance

    Hi,

    Apologies if this is a stupid question. I am a new IT contractor. I imagine I am a pretty typical infrastructure H/W, OS etc etc. I do mainly installation, configuration and support of server/networks work and typically only work 50-70% of the year. It did not occur on my first contract but my new contract mentions that I must have PL and PI insurances. I know what they are meant to protect against, but I do not understand why, when I am operating as a Ltd company, I need these. I thought one of the main thing underpinning that was that there was ltd liability.
    I am not just looking to avoid paying for it, I surely will if it is advisable/best practice, I just want to have a better understanding of my risk.

    Thanks,

    #2
    ...

    Originally posted by geejaybee View Post
    Hi,

    Apologies if this is a stupid question. I am a new IT contractor. I imagine I am a pretty typical infrastructure H/W, OS etc etc. I do mainly installation, configuration and support of server/networks work and typically only work 50-70% of the year. It did not occur on my first contract but my new contract mentions that I must have PL and PI insurances. I know what they are meant to protect against, but I do not understand why, when I am operating as a Ltd company, I need these. I thought one of the main thing underpinning that was that there was ltd liability.
    I am not just looking to avoid paying for it, I surely will if it is advisable/best practice, I just want to have a better understanding of my risk.

    Thanks,
    Does any of your installation/repair work involve electricity?

    Comment


      #3
      Originally posted by geejaybee View Post
      Hi,

      Apologies if this is a stupid question. I am a new IT contractor. I imagine I am a pretty typical infrastructure H/W, OS etc etc. I do mainly installation, configuration and support of server/networks work and typically only work 50-70% of the year. It did not occur on my first contract but my new contract mentions that I must have PL and PI insurances. I know what they are meant to protect against, but I do not understand why, when I am operating as a Ltd company, I need these. I thought one of the main thing underpinning that was that there was ltd liability.
      I am not just looking to avoid paying for it, I surely will if it is advisable/best practice, I just want to have a better understanding of my risk.

      Thanks,
      The short answer is yes, most definitely.

      Besides it being used a measure (rightly or wrongly) by HMRC to determine your IR35 status, or at least risk of investigation, it will be, without doubt, a requirement by the client co’s you work for as you point out, you only have limited liability - that isn’t of much use to your customers if you cause damage or injury on site, or given bad instruction or advice during a project.

      Given the cost, it’s an absolute no brainer.

      Comment


        #4
        Some contracts specify it so you are going to have to get it just to meet contractual obligations regardless of risk of needing it.

        It's about £240 quid from QDOS which also gives you 3 free contract reviews so as already said, no brainer.
        'CUK forum personality of 2011 - Winner - Yes really!!!!

        Comment


          #5
          Originally posted by geejaybee View Post
          Hi,

          Apologies if this is a stupid question. I am a new IT contractor. I imagine I am a pretty typical infrastructure H/W, OS etc etc. I do mainly installation, configuration and support of server/networks work and typically only work 50-70% of the year. It did not occur on my first contract but my new contract mentions that I must have PL and PI insurances. I know what they are meant to protect against, but I do not understand why, when I am operating as a Ltd company, I need these. I thought one of the main thing underpinning that was that there was ltd liability.
          I am not just looking to avoid paying for it, I surely will if it is advisable/best practice, I just want to have a better understanding of my risk.

          Thanks,
          The limited liability aspect protects the shareholders from having to pay the company's debts if things go wrong, i.e. they are limited to the value of the shares they own.

          In a lot of cases you must have the insurances as part of your contract, and so not having them could be a breach of your contract. Aside from that, there is still the risk of the company losing any assets and retained earnings it has.

          It is best practice to have both and for the sake of £100-£200 it is not worth the risk in my opinion, if not having them is even an option.

          I hope this helps.

          Martin

          Comment


            #6
            Originally posted by geejaybee View Post
            Hi,

            Apologies if this is a stupid question. I am a new IT contractor. I imagine I am a pretty typical infrastructure H/W, OS etc etc. I do mainly installation, configuration and support of server/networks work and typically only work 50-70% of the year. It did not occur on my first contract but my new contract mentions that I must have PL and PI insurances. I know what they are meant to protect against, but I do not understand why, when I am operating as a Ltd company, I need these. I thought one of the main thing underpinning that was that there was ltd liability.
            I am not just looking to avoid paying for it, I surely will if it is advisable/best practice, I just want to have a better understanding of my risk.

            Thanks,
            I have Employer Liability / Public Liability and Professional Indemnity on my current contract as the agent needed proof before I got the gig, but I didn't have any on my last Public Sector contract

            Comment


              #7
              My last agency required me to have £1million of PI and PL. I had to upgrade my previous cover levels and got stung for another ~£300 for the year
              Without it though I couldn't start the new contract.

              My point though is to make sure you get the right cover levels, if stated in the contract.

              Comment


                #8
                Not unless your contracts specifically ask for it, but many do. PI insurance is just good sense, PL I think is essential if you're working on-site. The only one you can reasonably get away with not having is employer's liability if its just you, but if your circumstances change (you employ somebody, appoint somebody who isn't a family member as company secretary) you may need to get it - I believe its needed to cover "workers", not just employees so you may need it if you sub-contract or send in a substitute too.

                All three can be had as one package from somebody like QDOS pretty cheaply (shouldn't even be a single day's rate) so its a bit of a no-brainer.

                I've had PI since I started and added PL and EL when I appointed my wife as company secretary (we weren't married when she was appointed so EL was needed - I'm not sure it would have been if we were married at the time).

                Comment

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