Stuart Gentle Publisher at Onrec

Too few contractors take out professional indemnity insurance


End-clients'' demands for compulsory professional indemnity cover increasing

Despite an increasingly litigious business environment in the UK, many contractors are still unprotected for claims for professional negligence says contractor specialist giant. A survey by giant reveals that only 21% of contractors have professional indemnity insurance.
Professional indemnity insurance provides contractors with financial protection against legal claims from clients (and therefore agencies) who have suffered a financial loss due to a contractor''s negligence.
According to giant, an increasing number of end-clients are demanding that contractors are insured for professional negligence and are making this a compulsory requirement of new contracts.

Comments Matthew Brown, Managing Director of giant group plc: Both end-clients and agencies are moving professional indemnity cover up their priority list when considering contractors for new jobs. Unfortunately, rising premiums have discouraged contractors from insuring themselves, despite the increased chance of a legal claim if a mistake is made.

End-clients and agencies are sometimes reluctant to use the services of uninsured contractors as they would be unable to recover full damages from the contractor in the event of a negligent act. They may also be placing their own company''s reputation at risk if their services are affected by the contractor''s mistakes.

According to giant, higher earners are at greatest risk of claims because they are handling higher-level work.
Adds Matthew Brown: Unfortunately, a lot of contractors still feel that if they have not been stung by a claim in the past, they will be safe in the future. Contractors need to bite the bullet and get themselves covered to ensure they do not lose out on new contracts in what is still a difficult market.

At giant we have reflected this trend in the market by incorporating free professional indemnity, public liability and employers'' liability insurance into our new interactive accounting and payroll services for contractors.