The old adage “prepare for the worst and hope for the best” accurately sums up why contractors have insurance, but the level of cover we require can be a bit baffling. Jackie Biswell of Apex Roofing has teamed up with Lesley McKee of Alan Boswell Insurance Brokers to outline the top considerations when it comes to insuring a project.
Ensuring you are insured is all very well and good, but insurance is a vast and complex business with a whole host of “ifs” and “buts” thrown into the mix.
But things can and do go wrong; the truth of the matter is that without the proper back-up a business can go bust in the event of a crisis.
That’s why it is crucial to get the right advice from insurers who understand how your sector operates and why it’s important you are upfront and honest about the specifications of your project, so you don’t end up under-insured or not adequately protected.
Fair representation of risk is vital
An insurer’s perception of risk is going to be very different to a contractor’s perception of risk.
Often an insurer may appear overly cautious. However, your job as a contractor is to be accurate in reporting the details of any previous incidents and material facts. This will have a direct effect on the level of risk attached to the job you are insuring. It will also give the insurer all the information they need to work out balances of probability for anything going wrong.
Pay attention to contract value
If your contract exceeds the value you have stated in your insurance you will not be covered should the worst happen.
When providing details to your insurer about the project it’s always best to overestimate the value of the project than stick to the exact price of the contract. This will give you a buffer so that you don’t run the risk of being underinsured.
Overestimating makes very little difference to the premium and will make sure you are protected. If, as the job progresses, additional elements are added to the contract, your insurer will accept add-ons for these tasks too, so make sure you keep them up to date with any changes.
The same applies for length of contract – be sure to incorporate the maintenance period into the contract length so that you are covered during the snagging period. Check the contract wording to be sure you are clear on how long they will hold you liable for the maintenance of the project.
This goes without saying, but if you are not compliant on site with current H&S legislation and there is an accident, your claim will not be paid.
This may sound like common sense, but from an insurer’s perspective they will need to see up-to-date and accurate evidence of such compliance before they will process the claim.
Insurers honour good business practice as in up to date risk assessments, properly trained staff, H&S compliance and correct safety workwear provision.
Subcontractors are all the same, aren’t they?
No – not from an insurance point of view. A bona-fide subcontractor is a subcontractor who works under their own insurance.
This does not mean that if a bona-fide subcontractor’s actions cause you to be legally liable for something that you are not insured.
Your insurance will cover any liabilities against you even if they are produced by another party.
What it does mean however is that your insurer will not offer coverage for any liability of the bona-fide subcontractor.
It’s essential that you check that your bona-fide subcontractors have the same level of public liability coverage as you do, or at least the level stipulated in your policy, prior to engaging them.
For the purposes of insurance, a labour-only sub-contractor is an employee. They will need to be factored into your insurance calculations as employees, as they are working under your directive and are therefore your responsibility.
It’s worth noting too that if a claim is made and an employer is found to have been negligent, the insurer has the right to claim back the amount paid out from the employer, although in practise this very rarely happens.
The boss’s background matters
Many don’t realise that if a Director of your company has ever had a CCJ and you haven’t declared this, or if they were previously a Director of another company that went into liquidation or administration, then these are considered as material facts which unless declared usually renders your insurance invalid.
The most important thing to bear in mind with insurance is to err on the side of caution and keep your insurance company in the loop. Even if you are providing them with more information than they need, it’s better than providing them with too little and then finding you aren’t covered should the worst happen!