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What are the risks of hiring contractors to your creative agency?

Hiring a contractor can provide lots of benefits to your creative agency, but it does come with some risks. Discover how to protect your business in 2024

Contractors can play an invaluable role in your advertising agency, helping you to deliver high-quality work for your clients with more flexibility yet lower overheads than an employee.

At the same time as providing these benefits, there can be some risks involved in working with a contractor. They are likely to have their own insurance policies covering them and their work in case of any unforeseen difficulties. But how can you protect your own business from the potential financial implications of any issues that might arise?

Read on to learn about four risks of working with a contractor for your agency and how you can protect yourself from the possible financial impact of those potential dangers.

1. Contractors may pose unique challenges to cybersecurity for your organisation

Cybersecurity is an evolving area that requires you to stay up to date on threats. Working with contractors can add a layer of complexity to this.

To do their job, your contractor will likely need access to your systems, but will often use their own equipment to do so. This means you have less control over the precautions they take to prevent cyberattacks than you would with your employees.

While a good contractor will have robust cybersecurity features on their devices, human error and malicious software can still create issues. If your contractor is working remotely, this opens up even more potential for cyberattacks or security breaches.

Being targeted by a cyberattack can be costly for your business. In 2023, the Cyber Security Breaches Survey found that businesses suffered an average financial loss of £1,100.

Cyber and data insurance can help to cover any costs you incur if your business is the victim of a cyberattack.

2. A contractor could allege that they were injured as a result of negligence on your part

If your contractor is working on-site in your offices, sets, or other workplaces and is injured as a result of negligence, you could face costly legal fees.

This could include tripping on loose flooring or being injured while using faulty equipment. If the contractor claims that their injury was caused by negligence on the part of your business, they could bring a claim against you.

The legal costs associated with this can add up, not to mention any loss of earnings you might experience during the process.

Public liability insurance can help to cover these costs so that you can avoid the financial implications of a case affecting your business operations long term. It may not be a legal requirement, but some clients might insist that you have a certain level of cover before starting work on a project.

3. The contractor might be unable to fulfil their duties

While all contractors will intend to fulfil the duties you have hired them for, sometimes they could fall ill or other unforeseen circumstances mean it’s simply not possible for them to work.

While your contract with them may have clauses that relate to this eventuality, you can add an extra layer of protection for your business with non-appearance insurance.

This policy can cover your costs if a member of your team, including a contractor, is unable to work on a project on the required day. The cost of delays or needing to hire someone new at short notice could potentially push you over budget or worse, lose you the work.

By taking out non-appearance insurance, you’ll be covered for the financial aspects of this, so that you’re not left out of pocket.

4. A client could allege that they have suffered a loss of earnings as a result of work you’ve provided

You’ve no doubt implemented robust processes that enable you to identify and hire the most suitable contractors who consistently deliver high-quality work. Now and again, though, mistakes can happen or work isn’t quite up to the standard you’d like.

In the worst-case scenario, if contractor-completed work that you provide to clients is below par, the client could allege that they have lost earnings as a result. You might need to pay costly legal fees if this is the case, both to settle the cost and protect your agency’s reputation.

Your contractor will likely have their own professional indemnity insurance for this reason, but it may be sensible to take out a policy for your business too.

Get in touch

Protect your agency from the unique risks you face with bespoke insurance packages designed to suit you. Our team is experienced in helping creative businesses like yours to find the right insurance for them.

To start the conversation, email creative@eggarforrester.com or use our contact form to request a callback from our team.

Posted: January 22, 2024 | Categories: News

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