Why do contractors need insurance?
Accidents and injuries
Your work may involve travelling to many places. As a contractor, having insurance in place can cover you for brushes with the unexpected, in the UK and beyond.
If you’re an IT contractor, clients trust you with business-critical kit. Slip in the server room and you could damage hardware – and the owner may sue. Likewise, accountancy contractors who onboard clients at home might be liable if a light fitting were to fall and cause injury.
Public liability insurance could be useful for contractors to include in their cover, to help offset such risks.
Technical problems
Your line of work may require expensive equipment, and using this on the go could increase the risk of damage or theft. Perhaps you’re a trade contractor who uses specialist laser distance measures to get the job done, or a financial services contractor who carries your business around in a laptop bag.
Delays, complaints and upfront replacement costs can all arise from equipment issues. Fortunately, you can add portable equipment insurance to your policy, which can be helpful for contractors when dealing with the cost of repair or replacement.
A negligence claim
You’re an electrical contractor working on one of many construction projects. With the job in question, once the spades are in the ground it becomes apparent that your professional advice on the wiring of a new office block was poor and has led to financial losses.
Your client isn’t happy, so they claim professional negligence.
As a contractor, you may be liable to pay legal fees and compensation – which is where professional indemnity insurance can help. This cover can help to support you with paying the cost of compensation, should a client claim you’ve made a mistake or been negligent in your work.
What insurance is available for contractors?
At Hiscox, we cater for a wide range of contractor professions and provide many business insurance types. Exact cover availability will depend however on the type of contract work you do. If you have any questions about cover availability in your line of work, get in touch with us . Below are some typical contractor covers.
Professional indemnity insurance
In a contracting business, skills are what you sell. The nature of this arrangement could leave contractors vulnerable to professional indemnity risks if clients decide to take legal action. No matter how diligent you are, mistakes can happen – a lost laptop could lead to confidential information falling into the wrong hands, for instance.
If you give advice as an IT or electrical contractor, then misinterpreted recommendations can become negligence claims. Including professional indemnity as part of your insurance could help prepare for these risks, which can be common for a contractor.
Public liability insurance
As a contractor, you’re responsible for the work you do – but you’re unable to control claims for related injuries or property damage. You might be installing a sign on a business block when a roof tile is dislodged, falling onto a parked car. The owner may take you to court and, even if you are cleared of wrongdoing, the legal process bears a cost.
As a contractor, public liability insurance can help with your legal fees and compensation costs in such cases.
Portable equipment insurance
Insurance for your all-important tools and electronic equipment could provide a lifeline for contractors. Equipment tends to sustain damage at the worst possible time, and theft can take any business by surprise.
Portable equipment cover can help financial services contractors, for example, to avoid lengthy periods without their kit, such as laptops and storage hardware. Having this insurance can help you avoid uncomfortable conversations with clients by covering the cost of repair or replacement.
If you’re not sure what you need, tell us a little more about your contractor business. We’ll build your quote, and we’ll help you explore any other insurance needs.
Build my coverInsurance for contractors: FAQs
Is contractor insurance a legal requirement?
As a contractor, you’re not legally required to have any insurance besides employers’ liability cover. This may become a legal requirement (external link) if you hire people. However, contractors may feel they need professional indemnity and public liability insurance to help protect their finances in the event of a claim.
How much does contractor insurance cost?
Contractor insurance costs start at £8.40* with Hiscox. Costs will also depend on individual factors, such as the size of your business and your place of work, as well as the cover types you add to your tailored policy. You can learn more about how much business insurance costs in our helpful guide.
*Figures based on an average of all business insurance policies sold to at least 10% of our customer base between February 2024 and February 2025
How can I reduce the risk of a claim against me as a contractor?*
Working as a contractor places you in an unusual position. For the duration of your contract, you may feel just like any other member of staff but, in legal terms, contractors and employees have different rights, responsibilities and levels of risk.
How you conduct your business is your choice and responsibility, but there may be several things contractors might do to reduce the risk of facing claims.
These could include checking paperwork carefully prior to signing, keeping copies, obtaining email confirmation, and practising clear communication. As a contractor, insurance can help to provide another level of protection against the cost of a claim, too.
*This is not to be considered as advice.
Do I need proof of insurance to work as a contractor?
Proof of insurance is not necessarily essential for contractors since the law doesn’t stipulate rules for most types of cover.
However, some clients may request proof that you’re fully insured, and could even specify it in a contract. This could be more likely if you’re working in a place where risks to the public are heightened, such as a building site near a main road.
Insurance can offer financial reassurance and reputational protection, so you may want to consider cover even if there is no contractual obligation.
Do I need insurance before starting work as a contractor?
In business, things can go wrong at any time, so getting insurance before you start trading may provide welcome protection. You could arrive on site on your first day only to be met with an accident, theft or serious allegation.
Setting up as a contractor often involves a process of networking and relationship-building. If you’re still very much in the planning stage, then it might be beneficial to start some conversations to get the ball rolling before you lay down the paperwork.
How long does it take to get a contractor insurance quote?
Getting a contractor insurance quote takes minutes when you apply online with Hiscox. In just five minutes, you can apply by telling us more about what you do, and we’ll put together a personalised quote that’s right for your business.
Meet our experts
“One thing I’m truly passionate about is Hiscox’s ability to provide expert knowledge, whatever the situation. Our team of in-house tech specialist underwriters and lawyers have years of experience and can navigate customers through complex claims, providing expert solutions.”
- Adam Atkins, Head of Technology
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