Underwriting expert at FMB Insurance, Mick Ayers, answers your questions about Public Liability, Employers Liability and Contract Works insurance.
Question: What limit do I need?
Answer: Available limits are £1 million, £2million, £5million and £10million.
“The level of cover you require will depend on your business and the type of work you undertake,” says Ayers. “Usually, the bigger the company, the higher the limit you need. Consider whether your customers have specific needs. For example, if you undertake work for Government or local authorities, they may request limits of £5 million or £10 million.
“Just remember, third parties could make claims for costs including compensation for injury, loss of earnings, medical costs and ongoing care, or property damage – so whilst the cover sounds like a high limit, claim values can soon add up!”
Q: Do I get a certificate?
A: “You get a certificate of Employers Liability, but you do not get a certificate of Public Liability cover. We can issue you with a summary of cover as evidence for your client,” explains Ayers.
Q: Who do I need to cover?
A: “Employers Liability is mandatory cover for Limited Companies or sole traders with employees. You need to cover all direct employees and any labour-only subcontractors working under your control,” says Ayers.
Q: What is the difference between types of subcontractors?
A: Labour-only subcontractors should be treated as employees for the purposes of cover under your liability insurance. Generally, they work under your direction and do not provide their own materials or tools (except for small hand tools). Whereas bonafide subcontractors are deemed to be contractors who work without direction from you, they hold their own insurance and usually provide their own materials and tools.
“As long as they are not working under your direction, have their own legal liabilities and insure themselves, there is no need to include them in the count of employees. But they should still be noted on your liability policy for contingency cover purposes, such as where their own cover is insufficient for damage or injury they cause on your site, or where they injure themselves and you are deemed responsible as the main contractor,” says Ayers.
Q: What is an ERN?
A: An Employee Reference Number, or ERN, is given to every business that registers with HM Revenue and Customs as an employer.
“We request the ERN from all customers that purchase Employers Liability Insurance, and this is provided to the Employers’ Liability Tracing Office who keep it on record. Insurers can refer back to the insurer at the time the exposure or accident occurred, even if the illness doesn’t occur until decades later such as hearing loss, vibration, or exposure to asbestos,” Ayers explains.
Find your ERN on correspondence from HMRC about PAYE, on P45, P60 or P11D documents, or in the yellow booklet supplied by HMRC when you registered the company.
Q: What does it cover?
A: Contract Works (sometimes referred to as Contractors All Risk) covers any new works as they are being constructed, such as extensions, loft conversions, new builds and more. It will pay to repair or redo work that’s in progress if it is damaged by an insured event such as fire, flood, storm, malicious damage, or theft.
As Ayers explains: “It’s important to note it won’t cover existing works – so if you were undertaking an extension, and there was a fire or flood, only the damage to the extension part of the property could be covered.”
You can also include cover for your own plant, temporary buildings and hired plant and machinery.
Q: What limit do I need?
A: “You should consider the total cost of your largest project (including labour and materials). It is not an aggregate limit.
“So, if you undertake three jobs a year that are each £100,000 or under, you only need £100,000 of cover. If you are undertaking a £500,000 contract that will run over two years, you will need £500,000 cover,” says Ayers.
Q: Who can FMB Insurance get liability quotes from?
A: “We have access to a wide range of insurers and brokers including Ageas, Allianz, Aviva, Axa, Covea, iPrism, IIGL, Jensten, London Markets, QBE, Q Underwriting, RSA, Zurich, and more.”