Public Liability – Are you sure you’re insured?

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By Sharon Wyndham, Compliance Officer at BiKBBI

Insurance policy schedules are packed with detail and small print, however it’s incredibly important these details are scrutinised and fully recognise that the business information you declare in your Statement of Fact, ultimately determines the validity of your policy.

My role as Compliance Officer at BiKBBI involves the scrutiny of our members policies. I see hundreds of PL schedules cross my desk each week. Policies vary in size, format and context but what I am seeing increasingly is a rise in small print exclusions which I suspect is driven by insurers need to keep policy fees low in this incredibly competitive industry. However, these exclusions can be detrimental to policy cover and therefore must be considered carefully… It’s true what ‘they’ say in that “you get what you pay for”.

A very common exclusion we find is the exclusion of heat, with insurers stating that heat work was not declared in the Statement of Fact.

When we come across this, our members usually say ‘I don’t use heat’, but we must understand how insurance works and particularly the relationship and responsibility of contractors. Some installers do not physically use heat, however will instruct a Bona Fide Sub-Contractor that does.

This relationship equates to the same thing, as the main contractor you are deemed to be the Primary Contractor and the responsibility therefore ultimately rests with you, regardless of your sub-contractor’s insurance status themselves. As the main contractor, you have the commercial agreement with the Property Owner and you introduce the Sub-Contractor to the project.

The wording of these exclusions / endorsements can be ambiguous. As an example, we see PL policies with an exclusion and a condition both included but it is not obviously clear which prevail, therefore it is crucial to obtain clarity on this.

Another common exclusion surrounding heat is the ‘Heat Work Away’ exclusion. This means you will not be covered for working within any premises other than your own – which as a home improvement tradesperson, is a point that will invalidate your insurance in pretty much every instance when working in other people’s homes.

Exclusions and endorsements are not just limited to Heat Work, there are literally hundreds of them.

Bathroom Fitting exclusions that include sanitaryware. I mean, name me one bathroom installer that wouldn’t install baths, basins and toilets! Yet we see policies including these exclusions all the time. It’s ridiculous!

But the list goes on. Gas Fitting exclusions, Damage exclusions, Manual Work exclusion and my favourite at the moment (and seeing a lot of) an Efficacy exclusion which an example of exclusion wording for this is:

We will not be liable in respect of any claim arising from the failure or partial failure of anything sold, supplied, repaired, altered, installed, maintained, serviced, processed or tested by You or on Your behalf to fulfil its intended purpose.

Last but not least a new one surfaced very recently, namely, Internal Restriction and this was included in a PL schedule where the trade activity declared was General Builder:

We shall not be liable under this Policy in respect of liability caused by or arising out of internal work undertaken at a height from the floor of more than 1 metre. So, unless you’re a builder of toy villages, this policy would not cover you in any event. Unbelievable I know.

In a nutshell, things to consider when taking out a PL policy are:

Cheapest isn’t necessarily best. Think of cheap bin bags or the cheapest tattoo artist.

Have your demands and needs been met? This is crucial. Having insurance is one thing, but it’s useless if it’s not relevant, because as soon as you make a claim, it will be rejected!

Have you declared the correct information in the Statement of Fact? (Heat Work equipment I frequently see declared in the Statement of Fact are Blow Lamps and Blow Torches).

Are there any exclusions or endorsements included in the Schedule? No one likes reading the small print, but it’s usually the bit that catches you out with insurance.

If you’re renewing your policy, consider whether any of your circumstances changed?

Are you satisfied that the cover you have purchased is sufficient? Make sure there are no loopholes an insurer can use as a stick to beat you with (and they will)!

When you are presented with your new or renewal quotation, whether it be from your Broker or Insurer make sure you check it thoroughly for all considerations mentioned in this article.

Remember, a cheaper policy may be cost effective, but ask yourself whether it’s worth the paper it is written on? If the insurance provision is in place, but the cover is not, what consequences will you face if things go wrong? If insurance doesn’t cover it, it may become a personal liability to cover. If this were the case, what would this mean to you, your business, your family? Is it worth the risk?

Our service to members is not to hinder your business operation, or aggravate you with detail… our service is to ensure you’re not exposed to risk based on our experience and expertise.

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