Umbrella Insurance – what you need to know
29th May 2025
As an umbrella company, ensuring your contractors are protected isn’t just good practice—it’s essential. From professional indemnity to public liability and employer’s liability, the world of insurance can be complex, and it’s one of the most frequently asked-about areas in the industry.
In this blog, we’re cutting through the confusion to answer the key questions umbrella companies often face when it comes to insurance. Whether you’re new to umbrella insurance or just want to make sure you’re fully protected, we’ve gathered the most common questions and provided clear, straightforward answers to help you feel confident and informed.
What types of insurance cover do we need as an umbrella company?
Umbrella companies in the UK are typically required to have certain types of insurance to comply with legal and industry standards. These include:
- Employer’s Liability Insurance: Your umbrella company employs staff which includes contractors you engage. Employer’s Liability insurance is a legal requirement in the UK. It provides cover if an employee suffers an injury or illness while working under your management. Without Employers Liability insurance, you’re in breach of the legislation, risk hefty fines and, more importantly, you could expose your balance sheet. Employers Liability insurance is more than a box to tick; it’s a reflection of your commitment to creating a safe working environment. It protects your business and ensures employees or contractors have a safety net if accidents occur.
- Public Liability Insurance: Operating an umbrella company doesn’t mean you’re free from risks involving third parties. If your business activities (or indeed those of your contractors) inadvertently cause harm to someone or damage their property, Public Liability insurance steps in. While not a legal requirement, it’s often considered essential especially when contractors work on client premises or interact with the public. Public Liability insurance covers legal costs and compensation claims arising from these scenarios, safeguarding your business’s finances and reputation.
- Professional Indemnity Insurance: In a fast-paced contracting world, errors or misunderstandings can happen. Whether its inaccurate advice given to a client, a mistake in project delivery, or a breach of confidentiality, Professional Indemnity insurance safeguards your umbrella company. It covers legal costs and compensation claims stemming from allegations of negligence or errors. From our perspective, Professional Indemnity insurance is not just a safety net it’s a mark of professionalism. It’s also a requirement of regulators and contractual requirements. Having Professional Indemnity cover reassures your clients and contractors that your business is prepared for challenges, giving you an edge in a competitive marketplace.
These insurances not only ensure compliance but also provide financial protection against potential claims. If you’re setting up or managing an umbrella company, it’s wise to consult with industry experts like Caunce O’Hara Insurance Brokers to ensure you’re fully covered.
Are contractors automatically covered under our policy, or do we need to add them individually?
Contractors, employed or self-employed, are covered under the policy. This is detailed in the ‘who is covered’ section of our policy wording. This means that their actions will be covered by your policy which provides several advantages, particularly for umbrella companies or businesses working with many contractors. Automatically covering contractors removes the need to individually add them to the policy. This saves time and reduces administrative burdens, allowing you to focus on other aspects of your business. With automatic coverage, there’s no risk of accidentally overlooking a contractor when arranging insurance. This ensures everyone is consistently protected, reducing potential liabilities. As your business or contractor base expands, automatic coverage ensures new hires are protected from day one, without requiring constant updates to your policy.
What happens if a contractor causes a loss or damage while working on a client site—are we liable or is the contractor?
The contracts between the end client, the agency (if applicable), and the umbrella company will generally make the umbrella company liable. It’s important to ensure that insurance cover is ‘back-to-back’ with the contractual terms, ensuring that limits and cover are compliant.
Can we tailor our policy to suit specific sectors like IT, engineering, or healthcare?
Our policy is already tailored for these professions; that’s the difference between our bespoke product and an ‘off the shelf’ insurance product. The ‘off the shelf’ products are generally geared towards one type of professional, i.e. IT consultant, whereas ours is a single policy that accommodates 100s of different trades, from IT professionals through to offshore workers, and everything in between.
Are we covered if a contractor works abroad temporarily?
Yes, all contractors are covered working full-time or temporarily abroad. Our policy wording provides comprehensive coverage and automatically includes a geographical limit of ‘Worldwide excluding the USA/Canada’. If you’re likely to have contractors working in the USA, speak with us to see how we can help.
Can we increase cover levels mid-term if our business grows or takes on higher-risk contracts?
Yes, we do offer the flexibility to make mid-term changes, especially if your business grows or takes on a higher risk. It is always important to communicate these changes to ensure your cover has no gaps and is fully protecting you and your company. We understand that businesses evolve, which is why we put in place servicing plans to ensure you have regular touch points with us.
Your insurance policy should evolve alongside your business. If you’re handling larger contracts, entering new markets, or offering more complex services, your current coverage limits might no longer be sufficient. Keeping your policy aligned with your growth ensures you’re protected against unexpected challenges.
As brokers, we’re here to guide you through every step of the process. Whether it’s increasing your cover levels mid-term, exploring new policy options, or simply answering your questions, our goal is to ensure your business thrives with the right protection in place.
How quickly can we get proof of insurance for a client tender or contract?
We send out proof of insurance as soon as you are covered. We understand that insurance can often be down the priority list, and the importance of being able to place cover and evidence the same quickly. That’s why we underwrite these risks in-house, to reduce the need to wait on referrals and pricing from insurers.
Will we be supported in managing claims involving our contractors?
Absolutely! Our dedicated claims team is committed to providing exceptional support when managing claims involving contractors. With a wealth of expertise in handling complex cases, they ensure a smooth, efficient resolution process while minimising disruptions.
Whether you need guidance on documentation, assistance with claim reviews, or support in navigating the claims process, our team is here to help every step of the way. Their proactive approach ensures that you receive timely updates, clear communication, and strategic insights to help achieve the best possible outcome.
By working closely with all relevant parties, they strive to make the claims process as seamless as possible, allowing you to focus on your core operations without unnecessary stress. Rest assured, our claims team is always ready to provide expert advice and comprehensive support.
Are there discounts or benefits for renewing or bundling multiple policies with you?
Being an experienced whole of market independent broker means we are not just advising on the covers taken out by umbrella companies, but a whole range of others such as personal accident and emerging risks like cyber. This is beneficial especially for companies who require more than one type of insurance. Having a single point of contact and renewal dates which fall on the same day can be a massive help and ease a lot of stress when obtaining insurance. There is also the added benefit of dealing with experts in the umbrella insurance field – there’s very rarely a query we haven’t seen before.