There are a number of different types of insurance that self-employed electricians need to protect their businesses from unexpected losses. These are:
- Property insurance
- Contract works insurance
- Employer’s liability insurance
- Public liability insurance
- Legal expenses insurance
- Personal accident and sickness insurance
Property insurance covers your own property against loss due to accidental damage or theft. This includes your business premises as well as your tools, equipment, materials and other property.
It is important to note that your property insurance may well not cover any tools – or other property – that are stolen from your van, so it’s important to make sure that such property is stored safely when it is not being used.
Contract works insurance
This is another type of property insurance and it’s sometimes called contractor’s all risks insurance. It covers your property while it’s on site, as well as any hired in equipment that you’re responsible for. It also covers the work-in-progress.
Employer’s liability insurance
This type of insurance is a legal requirement if you employ anyone, even if you’re only employing them temporarily or on a casual basis. There are severe penalties if you’re found not to have employer’s liability insurance when you needed to do so.
Employer’s liability insurance covers you if an employee makes a compensation claim against you because they feel you were responsible for them being injured or suffering an industrial disease.
Compensation claims can be expensive to settle. A relatively minor injury could result in a five-figure settlement, and more serious injuries often result in six-figure settlements. Even ignoring the legal implications, this is a type of insurance that you can’t afford to go without if you employ anyone.
Public liability insurance
This type of insurance is similar to employer’s liability insurance in that it deals with compensation claims made against you, although it deals with compensation claims made against you by third parties rather than compensation claims made by your employees.
Unlike employer’s liability insurance, public liability insurance is not a legal requirement, although, given the fact that compensation claims can be expensive to settle, this isn’t a type of insurance that you should consider optional.
In addition, many main contractors will stipulate that you need to be able to show evidence of a valid public liability insurance policy before you are allowed on site. It is important to check the contract because, although the standard indemnity limit in a public liability insurance policy will usually be £1,000,000, some contracts will insist on an indemnity limit of £2,000,000 or even £5,000,000.
Most public liability insurance policies only cover compensation claims involving either an injury to someone or damage to third party property. It’s important to make sure that your public liability insurance property includes a financial loss extension so that claims involving purely economic losses are covered.
Legal expenses insurance
Legal expenses insurance covers your legal fees if you find yourself involved in legal action. Your legal expenses insurer will also be able to help you deal with the legal action.
It covers a range of different type of legal action, including:
- Contractual disputes
- Disputes with neighbours
- Criminal charges
- Employment tribunals
- Tax and VAT inspections
Personal accident & sickness insurance
Personal accident and sickness insurance protects you if you are unable to work because you are ill or have been injured. This means that you don’t have to worry about how you are going to cover your monthly bills and put food on the table, and can concentrate on recovering from your illness or injury instead.
This type of insurance pays a weekly benefit if you are off work temporarily. If you won’t be able to return to work, a lump sum is payable.