Employers Liability Insurance

**4Contractors** · 7 October 2004, 08:50

That's very interesting.

We have never had it but it used to be one of the so called criteria for IR35 assessment and being in business on your own account...if I remember rightly it used to cost around £200 and at least one of the major suppliers of this insurance went bust and left contractors uninsured. Presumably with the recent hikes in corporate insurances it is now more expensive.

More confusion bandied around a few years ago to create maximum confusion and uncertainty around IR35.

**cooperinliverp00l** · 7 October 2004, 10:58

I have never really understood all the different insurances you need. What are the legal requirments. What insurances do you need to trade and then what are the extra insurance policies that aren't a requirment but are handy.

**silicondale** · 7 October 2004, 18:18

Just employers liability

Hi, cooperinliverp00l-

Only employers liability insurance is compulsory (it's an offence not to have it - and potentially horrible fines of up to £2000 for every day that you don't !). However, it's administered by HSE and they don't chase it very actively unless they have a complaint. You're hardly likely to complain about yourself !

Otherwise, many people think it's a good idea to have public liability insurance - that protects you if you have a vsitor who trips over your doormat and breaks a leg. If you're working at home you could well find that you're covered anyway, by your home contents policy.

Also professional indemnity insurance. Can be horrendously expensive nowadays, and I find that I can get by perfectly well without it. Just let the client know that you don't have it so he doesn't even bother to sue ! He's not even going to recoup his legal fees from a small consultancy firm, let alone damages.

**tim123** · 8 October 2004, 09:11

Re: Just employers liability

"He's not even going to recoup his legal fees from a small consultancy firm"

Except that it isn't the company they'd be suing, but the individual. People are professionally negligent, companies aren't (though they can be jointly liable).

It's all well and good saying "I don't need PN because I have nothing to pay out a claim" provided that it's true. If (like many) you have a house that has tripled in value in 5 years there's 200 grand that they can take off you and with an increasing trend for people to "self-pension" that money is not ring-fenced like a normal pension so there's another 100 grand or so they can take from you.

Don't fall into the trap of thinking that because the company has Limited Liability I am safe because it isn't true. If you, as a professional, stuff up professionally, it is you that can be sued (and yes, this applies to normal employees as well, though in most cases their employer will have provided them with the necessary insurances).

tim

**4Contractors** · 8 October 2004, 09:44

Re: Just employers liability

I have heard lots of scare stories about professional indemnity and public liability and the reasoning behind taking out the insurances. In my eight year contracting career I have not been asked about these types of insurance by any of the clients I have worked for or agents I have worked through. From my experience these insurances are not generally taken up by computer contractors with limited companies.

Can anyone give me an example of a case where a contractor without these insurances has been successfully sued personally.

**silicondale** · 8 October 2004, 10:05

No, it's the company

Tim -

No - when you work through a limited company, the contract with the client should be signed "for and on behalf of" that company. The client's contract is with the company. It's only the Inland Revenue that seems to have the power to 'deem' that reality is any different. You are purely an employee of your company, and unless you are foolish enough to sign over to your company (or worse still, your client) an unconditional charge on your personal assets, the only way that they could get at your personal property is by your company making a claim against you. Now are you really likely to do that ?

- Steve

**tim123** · 8 October 2004, 10:47

Re: No, it's the company

Steve,

It matter's not one jot who signed the contract.

If a professional person *personally* performs work for another party and that work is negligent then the individual is personally liable. As I said before, this applies to all employees: directors of one man companies, directors of mega corporations or numpty staff employees of same.

Do not confuse business decisions with professional negligence. Deciding to deliver a product late (or not at all) because it hasn 't been tested properly is a commercial decision that the company's Ltd status protects it from. Delivering an untested product which later turns out to have fatal bugs in it, is potentially negligent (as best practice hasn't been followed) and the Ltd status is no protection.

As Rhino has pointed out is is rare in the case of software (or computer hardware) development for anyone to be prosecuted for negligence, but it is common in the field of Construction Engineering and individuals can, and have been, bankrupted by such action. This is probably because faulty software rarely kills anybody (there have been some instances). When faulty products are delivered there is often a commercial decision that protecting a reputation is better than pursuing (or defending) legal action. But when people get killed the suing is not done by the party that the product was delivered to, but by the aggrieved relatives who have no commercial interests to protect.

Pity those people who specalise in medical software.

tim

**4Contractors** · 8 October 2004, 11:05

Re: No, it's the company

I think the problem with pursuing individuals is the obvious limitation on money that can be retrieved. Companies like to sue other companies and their insurance companies to make it worth their while and not really hurt anybody individually. I imagine that cases against individuals would occur where there was any criminal intent or motive involved.

I wonder who was negligent with the Airbus software a few year ago - that definately could have killed somebody

Employers Liability Insurance