PI insurance – providing cover for substitutes and changing roles
To stay competitive and in a contract throughout your contracting
career, you’ve probably upgraded your skill set, retrained and worked across a number of different roles. This becomes increasingly common if you become more of a consultant than a contractor
, and advise several clients about a range of different issues.
Fortunately, your professional indemnity insurance
, or PI insurance
, can be as flexible as you are – just make sure you check with your PI insurance provider that your current business activities are covered. The same is also true if you engage a substitute for a contract, or hire a freelancer
to perform work for a client on your company’s behalf.
If changing roles, check your existing PI insurance is valid
Each contracting discipline has its own set of unique risks. If you are an office-based IT contractor
, you will be facing a different set of risks to an energy contractor working offshore
. Your PI insurance
is based on the nature of your work and, if that changes, you need to review your PI insurance coverage accordingly.
So, for example, let’s say you have been working on straightforward Java development contracts for a year. If you are then offered an IT consultancy
project that asks you to review your client’s product development strategy and recommend how it can be improved, you’re clearly delivering a different service. If this happens, contact your PI insurance provider and explain how your services have changed. Your PI insurance
provider will be able to note these changes and advise whether any amendments are required to your policy.
Check that your PI insurance covers a substitute
PI insurance is generally designed to cover only directors and employees of your company. With this in mind, your PI insurance may not automatically cover work carried out by a substitute if they do not work under your direction or control. This may be relevant if you have to send another contractor
in your place, particularly if they are a freelancers
If you are engaging another freelancer
as a substitute, it is likely they will carry their own PI insurance. It is important to carry you take reasonable measures to ensure that they do have their own PI insurance policy and it may be advisable to build a requirement to carry PI insurance into your contract with substitute.
Regardless of the circumstances, the golden rule is to keep your PI insurance
provider informed of any changes, to ensure you are always well covered.