Insurances - which do I need by law?

[chris79]

I've been on the phone today for the following:-

Employers insurance
Public liability insurance
professional indemnity insurance

Now can anyone please tell me which ones I must have BY LAW, as I keep getting told different things by different people...

My limited company comprises myself and my partner/wife, we both have a 50/50 share holding in the company, and we both work from within the company although I am not her boss and I do not 'employ' her as a worker in the company, she has equal rights...

[Cowboy Bob]

Employers Insurance is the only one required by law. The other two are likely to be specified in most contracts.

[Kyajae]

I've been on the phone today for the following:-

Employers insurance
Public liability insurance
professional indemnity insurance

Now can anyone please tell me which ones I must have BY LAW, as I keep getting told different things by different people...

My limited company comprises myself and my partner/wife, we both have a 50/50 share holding in the company, and we both work from within the company although I am not her boss and I do not 'employ' her as a worker in the company, she has equal rights...

If you are a sole director of your own ltd co. and thus the sole employee of your own ltd company who engages directly with a client (excluding the company secretary, emplyee liability is now not required). Any insurance co. worth their nuts will tell you that.

Having said that, Public liability and proff indemnity is a must. Many contractors may say don't bother but if something goes tits up, a lot of clients re savvy enough to go for the throat. I've been there, 4 years ago, where a client sued me for allegedly failing to complete a project on time and it costed them money. It was a case of the permies trying to stitch up the contractors. My insurance funded my legal defence and I won. Don't think it will never happen to you (unless you do some helpdesk monkey job - on the rate they pay you, suing you aint worth it)

[XLMonkey]

The reason you get confusing advice is because its confusing. After all, that's what keeps our friends in the revenue busy.

- by law, you must have employers liability insurance. The revenue have issued guidance that they do not consider it necessary if you are an owner-manager business where the owner is the only employee.
- but...
IF you are working on contracts that are outside IR35
AND, you do not have employers liability insurance
THEN, the revenue will say "you have no right of substitution, since you have no employer's liability insurance to cover your substitutes", and treat you as though you are inside IR35
THEREFORE, you should get employers liability insurance, regardless of how many people there are working through your company.

Public liability insurance: you don't have to have this by law (unless you are in the construction trade or something else that involves working in public spaces). you might need it for other reasons, but I can't think what they might be.

Professional Indemnity Insurance: you don't have to have this by law. You might need it to satisfy the client. You might need it to give yourself peace of mind, particularly if you work in software development/fixed price projects. Most PI policies also include employers liability insurance with them.

you haven't mentioned IR35 investigation insurance. There is no legal requirement for this, but most people in the contracting game take it out (as the pain of being investigated is a lot easier to bear with free legal advice).

[GreenerGrass]

IF you are working on contracts that are outside IR35
AND, you do not have employers liability insurance
THEN, the revenue will say "you have no right of substitution, since you have no employer's liability insurance to cover your substitutes", and treat you as though you are inside IR35
THEREFORE, you should get employers liability insurance, regardless of how many people there are working through your company.

This is an interesting point but is it based on a real life event or just paranoid theory?
You could argue why would you need to purchase the insurance prior to actually having any employees, other than purely as ammunition against IR35?
If you need substitute employees you purchase the employers insurance at that point, (or if/when the IR start taking an unhealthy interest in you)
At the moment I just have professional indemnity insurance, to add employees liability is only a paltry £112 but has anyone else got an opinion on this?

[ASB]

The reason you get confusing advice is because its confusing. After all, that's what keeps our friends in the revenue busy.

- by law, you must have employers liability insurance. The revenue have issued guidance that they do not consider it necessary if you are an owner-manager business where the owner is the only employee.
- but...
IF you are working on contracts that are outside IR35
AND, you do not have employers liability insurance
THEN, the revenue will say "you have no right of substitution, since you have no employer's liability insurance to cover your substitutes", and treat you as though you are inside IR35
THEREFORE, you should get employers liability insurance, regardless of how many people there are working through your company.

Public liability insurance: you don't have to have this by law (unless you are in the construction trade or something else that involves working in public spaces). you might need it for other reasons, but I can't think what they might be.

Professional Indemnity Insurance: you don't have to have this by law. You might need it to satisfy the client. You might need it to give yourself peace of mind, particularly if you work in software development/fixed price projects. Most PI policies also include employers liability insurance with them.

you haven't mentioned IR35 investigation insurance. There is no legal requirement for this, but most people in the contracting game take it out (as the pain of being investigated is a lot easier to bear with free legal advice).

That would be one hell of a creative argument. Are you aware if that has been tried ?

I think the rebuttal would be fairly straight forward. "When we substitute the insurance will become required. That's when we buy it".

[minstrel]

IF you are working on contracts that are outside IR35
AND, you do not have employers liability insurance
THEN, the revenue will say "you have no right of substitution, since you have no employer's liability insurance to cover your substitutes", and treat you as though you are inside IR35
THEREFORE, you should get employers liability insurance, regardless of how many people there are working through your company.

I don't think the substitution clause dictates that the person you substitute has to be an employee of MyCo (my contract certainly doesn't).

If the substitution clause were ever to be invoked wouldn't the more likely situation be that you sub-contract the work out to another contractor operating a Ltd company who would provide the resource? In other words you wouldn't have any extra employees, you would just have an additional business relationship with a supplier company.

[chris79]

thanks for all the replies, especially the one about IR35...

The problem I have is that whilst I am the director and the main worker in our company, my girlfriend also works as the company secretary and works on a contract 16 hours per week doing some admin work for a client (my mum!)...

On this basis is she an employee and despite the fact she is my girlfriend and wouldn't sue me, do I need employers insurance to satisfy both the law, and the IR35 argument?

cheers!

[weemster]

My understanding was you don't have to have Employers liability insurance if you are at least a 50% shareholder in the company.