Do Your CIS Contractors Need Insurance?

CIS

If you’re a recruiter engaging CIS contractors, you may be familiar with this question, and indeed your clients may insist that your contractors have appropriate insurance. Insurance is a cost that your contractors will need to plan for, and it’s important that they get the right advice. So, what insurance do CIS contractors need?

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Why do CIS contractors need insurance?

Broadly speaking, there are two main reasons for your CIS contractors to purchase insurance; to protect themselves and to protect your clients. Often your clients will insist that contractors have a minimum level of insurance cover.

Insurance to protect the client

As your CIS contractors are self-employed, they are personally liable for mistakes they make. While claims are rare, if a contractor’s mistake costs the client the liability can be very expensive. For this reason, the vast majority of clients will insist that your contractors have a minimum level of insurance, and even if they don’t it’s in your contractors’ interests to purchase cover.

Public Liability Insurance

Public liability insurance covers your contractors if their activities cause damage to someone else’s property or result in someone being injured or killed. It can cover legal costs and any compensation they have to pay.

Professional Indemnity Insurance

Professional indemnity insurance covers your contractors in case their work, service or advice causes your clients to suffer a loss, whether that loss be financial or reputational. Examples of possible claims include:

Negligence: If your contractor gives incorrect advice or makes a mistake

Defamation: If they produce or support libellous statements about your client

Breach of confidence: If they share sensitive information

Loss or damage: if documents or other property are lost or damaged while in the contractor’s care

Insurance to protect your contractors

Self-employed contractors are not paid when they don’t work, so if something happens to stop them working it could leave them in trouble. Many contractors purchase insurance to protect their income in the event that an accident or illness prevents them from working.

Contractor Personal Accident Cover

Personal accident cover pays either a lump sum or a regular payment if your contractor is unable to work due to an occupational accident. This usually means they would need to be at work, or travelling to or from work, when the accident occurred in order to be able to claim.

Income protection

Income protection insurance covers a wider range of possibilities, paying a pre-agreed monthly payment while the contractor is unable to work due to illness or injury. Often there is a “deferred period” before the policy starts to pay. Contractors should take care that the policy covers them for being unable to carry out their own occupation, as if this isn’t stated the policy may not pay unless they’re unable to work in any job.

Should your CIS contractors consider unemployment insurance?

Your CIS contractors are self-employed, not employed, so they will never be able to claim for a loss of employment. As a result, income protection for unemployment is not available to them in the same way that it would be to employees. Obviously, your contractors don’t want to pay for insurance that will not pay out if they need it, so we advise that they avoid unemployment insurance.

Where to refer your contractors for further information?

Out partners, Kingsbridge Insurance, specialise in contractor insurance, and will be able to advise your contractors based on their needs and circumstances.

If you have any questions or if we can help in any way, please call our expert team on 01296 468 483 or email info@orangegenie.com.

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