Obtaining the right insurance can seem like a minefield of technical jargon and fine print. However, getting it wrong can leave you and your business financially exposed.
You get what you pay for
It’s a well-known phrase, but one that unfortunately is often all too accurate. The policy that may appear a bargain could prove costly in the event of a claim.
Have you checked whether your broker understands your sector? By having a clear understanding of the risks inherent in your business, they can negotiate wide cover at reasonable rates, so there is no reason to skimp. The key is in obtaining the detail: have they asked probing questions about your business and how it operates? Are they specialists in the electrical sector? Are they aware of the changing legislation that affects electricians? Beware if you have been offered public liability cover in isolation. Electricians should also be covered for professional indemnity, financial loss and inefficacy – are you?
Don’t ignore the small print
Have you checked whether there are any warranties, endorsements or exclusions detailed in the quotation? These will levy certain conditions with which you must adhere in order for your policy to respond in the event of a claim. Every policy contains exclusions, it is worth taking time to understand what exclusions apply and if they are significant to your business. After all do you know whether your tools are covered if kept overnight in your vehicle? Or whether there are types of premises at which you are not covered to work?
Provide a full description of your business
There is a direct correlation between what is included in the business description of your quotation and your policy wording. Get this wrong and you could be left inadequately covered. If a claim occurs from an activity that is not detailed in the business description on your policy, your insurer may refuse to pay the claim. A full and accurate outline of exactly what your business does how it operates and where you work, is critical to ensuring you have the right cover.
Be aware of the sub-contractors warranty
From an insurance perspective, there are two types of sub-contractors: Labour Only Sub-Contractors (LOSC) and Bona Fide Sub-Contractors (BFSCs).
Labour Only Sub-Contractors work directly under your instruction will not generally provide their own tools and are classed as employees. As such, it is your responsibility to include them under your employer’s liability insurance.
Bond Fide Sub-Contractors will work under their own instruction, bring their own tools and materials to the job and have their own insurance in place. They are not classified as employees.
Many public liability policies carry a Bona Fide Contractors warranty. This puts the obligation on you, the contractor, to ensure all BFSCs working with you have their own public liability cover. You are required to retain a copy of their insurance certificate and to ensure it is up to date. If you comply with this and their insurance is cancelled (eg for non-payment) or fails to respond, your own public liability policy can provide contingent cover. If you don’t, you will be liable and not covered.
It is recommended that independent advice is obtained before agreeing to any policy to make sure you have appropriate cover in place.