Rabu, 18 Januari 2012

IT Contractor Insurance Explained

Contractor insurance is a vital commodity for any UK contractor, their professional position requiring adequate protection against potentially devastating financial outcomes. Contractor insurance policies are adept products designed for a number of eventualities and are a good example of specifically designed small business insurance.

Contractors are individuals who provide their professional services through limited companies on contract bases hired by larger firms. Unlike regular employees, contractors work for themselves, and this fact is something that can create both advantages and certain disadvantages on the contractor. Being self-employed, contractors are not employed by the company that they may be working for, and thus losing out on the many benefits and 'perks' that come with being in employment. These advantages could range from sick pay and holidays to necessary protection insurance.

The fact that contractors are not covered by any overhanging insurance umbrella means that they are very vulnerable when it comes to potential financial loss due to accident or error. Because of this, a large number of tailor made contractor insurance products exist, to protect, indemnify and cover contractors should the worst happen. Not only are contractors not covered by any employer's insurance, but as they are the owners, shareholders and workers for their limited companies, they are 100% liable in any case that may result in financial loss.

With contractors being in full charge of their own limited companies, this further reiterates the importance of insurance for contractors, making it a vital precaution as well as necessary cover. Some professionals may take out their own personal insurances on top of any provided by an employer, as a failsafe should any serious error occur that they may be liable for, but this situation is rare however and usually only happens in extremely high risk professions. For contractors on the other hand, this is compulsory, and most require purchasing certain insurance products before they can even get work.

Most contractors will have certain contractual obligations when signing up for a new contract and working at a new company. These may include providing an adequate substitute or a guarantee of service, but most often, contractor insurance is the main contractual requirement. Not only a vital protection, but contractor insurance policies themselves are compulsory with certain contracting professions. PI Insurance is a frequent compulsory insurance for contractors, but there are a number of products that contractors must purchase before they can actually work as a contractor.

The benefits that contractors gain from however are very important to the profession, their largest highlight being that they are taxed at a lower rate than average PAYE employees. Because contractors are taxed less by HMRC, they actually require insurance to protect them from any tax related issues, and most commonly from a HMRC contractor tax legislation called IR35. IR35 contractor insurance is a highly recommended product, and is yet another reason why contractor insurance is so important to self-employed company workers.

Insurance for contractors exists to cover a huge number of eventualities, and because of their high risk professional status, contractor insurance is very popular.

Selasa, 03 Januari 2012

Benefits for Freelance Insurance

Contractors are technically self-employed professionals who work via a previously set up limited company and are hired by larger firms for the services that their limited company provides. This basically means that an IT contractor for example would set up their own company that they then work for and would offer out the limited company and the service it provides to a larger firm. The firm would subsequently not be hiring the contractor as an employee; they would in fact be hiring the limited company on a contract based term.

Because of this system that contractors work by, a contractor is not an employee, and with this comes a number of differences to their professional status as opposed to an average employed worker. There are a number of factors that are greatly affected because of this as contractors do not benefit from the advantages and perks that come with being employed by a company. Insurance is one of these advantages that contractors lack because as they are their own company owner and boss in a sense, if any misfortune or error were to occur, they would be held fully liable to any claims or damages.

Contractors are fully liable for their own actions and the actions of their limited company, thus making them financially vulnerable when considering the risks that face contractors in the professional world. From sick pay to professional indemnity, contractors must insure themselves for any eventuality and any danger. Thankfully, contractor insurance exists and is specifically designed and tailored with contractors in mind, covering them from almost all potential outcomes facing self-employed professionals today.

Contractor insurance is vital within the contracting profession, with every contractor purchasing the relevant products to their line of work. Obviously a product such as employer's liability insurance would only apply to those contractors who employ within their limited company, but a far more general product such as professional indemnity insurance is purchased across the board, as its benefits are vast.

Many forms of contractor insurance (such as PI Insurance) are in fact often a contractual requirement within the clause of a job contract and thus cannot be overlooked by any contractor. The fact that jobs for contractors often demand a contractor is covered by necessary insurance highlights the need for contractor specific insurance, not just as a professional safety net.

As well as covering contractors from incidents and misfortunes that would result in financial loss and damage, a number of contractor insurance policies work in favour of professional status regarding a contractor's tax position. The HMRC is ever increasing its pressure on contractor's statuses, and by having certain insurance policies in place is often looked upon by the tax office as firm grounds of proving professional credibility.

Along with providing necessary cover protecting a number of eventualities, contractor insurance proves that a contractor is reliable to a potential company and secures their status as a reputable contractor within their own right.