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Professional indemnity insurance – a legal requirement?

Monday, October 18th, 2010

Professional indemnity insurance is a form of liability cover. If you provide a service and/or advice in return for a separate fee or as part of an overall contract, you could face a claim for professional negligence.

There is no legal requirement, under UK law, to have this cover in place. What you may find though, and this is happening more and more, is that you are required to have this as part of a contract you may carry out. It depends whether you are working for the private or public sector whether cover is requested and also, at what limit.

Unlike employers liability insurance, which is not only legally required but must be at a minimum limit of indemnity of £5,000,000, you can get professional indemnity at varying limits of indemnity, usually starting at £100,000.

If you do not have the cover in place at the moment, you will usually have two options. You can either add this to your existing combined (employers, public and products) liability insurance or you can take out a separate policy. Adding this to your existing policy is rare. The reason being that there are so few insurers that offer the standard combined liability insurance as well as professional indemnity. There are some that will do this, but they do not tend to be competitive across the board.

You will be better speaking to a broker and at least getting a quote both to add to your existing policy (if possible) and as a separate stand alone cover. At least this way you can compare the options that are available.

Also, speak to the broker and get their advice as to the limit of indemnity that you not only would possibly need but also that which would comply with your contract.

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Employers liability insurance – what limit of indemnity MUST I have?

Saturday, September 4th, 2010

If you either run a business or operate as a sole trader and have employees, you are legally required to have in force valid, and suitable, employers liability insurance. This is common knowledge amongst most business people, but the question we get asked most is what is the legal limit of indemnity required?

With access to information over the net, it wil only take you a few minutes to find a few sites that tell you a bit more about this cover. However, the answers and information you may see can be slightly confusing.

The first fact is that you need the cover if any working for you, whether they are paid or not, whether they are only part-time or whether they are only temporary, they fall under the definition of employee. Business insurance policies will always have, usually near the start, a few pages devoted to definitions. As the policy is a lengthy, and legal, document the insurance company is obliged to define certain things. For example, it will define what a building is, what stock is and how gross profit is calculated, as far as the cover is concerned.

There will also be a definition of employee, and this will always be quite wide.

You must have cover for a minimum limit of indemnity of £5,000,000 in respect of each and every claim. ie potentially you could have 8 claims at £4,000,000 or 17 at £3,000,000 etc etc. Most UK insurers have a standard minimum limit of indemnity of double this, at £10,000,000.

The problem, that causes some confusion, is that your certificate of employers liability, will only state on it the legal minimum, ie £5m. It is in the policy wording and schedule where it states that you have the increased cover at £10m.

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Employers liability insurance – cover for work placements.

Tuesday, July 13th, 2010

Anyone in business will know, that if you employ people, you need to have adequate employers liability insurance in force. When we say adequate, it has to be for a minimum limit of indemnity of £5,000,000 any one loss and the cover has to be provided by an insurer approved to trade in the UK.

This cover has been formed over many years, and can trace it’s roots back to the Employers Liability Act (1968). The legislation states that anyone, and we repeat anyone, who works for a business must be covered under the EL section of the business insurance policy.

It is immaterial whether they are paid, volunteers, directors on dividends or even family and friends helping out. If they are injured, and you or the business have been negligent, you may face a claim.

But what happens when you have a school age child on a work placement? The old YTS scheme has been replaced by a myriad of different arrangements and most school children around the age of 15, will be offered some sort of one or two week placement with a local firm.

Within your policy wording, it will state exactly what an employee is. There will be a paragraph that contains all of the different types of employee. If you are taking on a placement, the local authority or maybe the school, will ask that you prove cover.

You have a couple of choices here, either speak to your broker to get them to send a proof of cover letter, or you can copy the relevant parts of your policy wording and/or schedule, which shows that these children are covered.

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Getting an online business insurance quote

Wednesday, June 23rd, 2010

If you’re just about to start your own business, or have been trading for a while, one of the many questions you must ask yourself is, do I have the right policy in place?

Business insurance is very important, for two reasons.

Firstly, there are certain types of cover, such as employers liability insurance, that you must have by law. Whilst we sometimes moan in the UK about too much bureaucracy and too many laws, the vast majority are there for a reason. EL cover is laid down in statute to ensure that if employees are injured, and cannot work, that they are fairly recompensed if their employer can be proven negligent.

Secondly, your business, in most cases, is your livelihood. If you do not look after it, then you can find yourself in a sticky situation. You will of course do all you can, day in, day out, to make your business safe and to aim for the Holy Grail of profitable growth.

But, there are some things that you cannot legislate for and cannot protect yourself from. A hurricane storm that destroys your building, or a fire in a neighbouring property that spreads to yours, is nothing that you can control.

For these type of events, you need to have business insurance in place. It may not be a legal requirement, but it is a sensible and prudent step to take.

We have seen the Conservative and Liberal Democrat coalition emergency budget and whilst there is a lot of pain to come, at its core is to increase the entrepreneurial spirit in the UK.

Hopefully, over the coming years more and more businesses will be formed and will prosper. All of them need to have a policy in place that protects them against the unexpected, unplanned and uncontrollable events.

To get yourself a quote, the first and only step you should take is to speak to an independent professional, a business insurance broker. You do not have to see them, a telephone call or contact and correspondence online is sufficient. But make sure that they are able to obtain quotes from more than one insurer, otherwise how do you know you are getting a good deal?

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Business insurance – what cover do I need?

Saturday, June 19th, 2010

What may seem like a simple question, can become very confusing if you spend a bit of time looking on the internet and reading up on the subject.

There are very few, legally required, forms of business insurance in the UK. The main one that every owner is aware of is employers liability insurance. In addition there is third party motor cover and, if you have hydraulic or lifting plant, you need to have engineering inspection cover, which is a form of insurance.

One sure fire way of finding out exactly what cover you need, is to speak to an expert. What we mean is actually discuss this, either face to face, or over the phone with an independent business insurance broker. What you should not do, is fill in forms and receive quotes from a quote site. Whilst you may get a good price and what looks like good cover, you are not receiving any advice regarding what your real demands, needs, wants or requirements are.

We cannot stress enough, that just taking the time out to have a chat with someone who has access to a range of insurers, is time worth spending. The bonus is, that this process is free. Most brokers are quite happy to discuss, help and advise for free, you never, every have to pay for the quote.

It may be that your current cover is insufficient or the way that it has been arranged is far too complex or is based on too many separate policies. Insurers are changing and refining their wordings all the time. Whilst you may have had to have two or three separate policies a few years ago, in 2010 it may be that a new or existing underwriter has a better, more competitive product that encompasses all of your requirements.

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Shop insurance – wedding dresses and alteration cover

Saturday, May 15th, 2010

Look around any high street in the country and you will find that there is a wedding dress shop. Gone are the days when you were so restricted and had to travel miles for your dress fitting.

If you are the owner of one of these business then you will have shop insurance in place to cover your stock, contents and liabilities. Many of these shops are basic retail only, with the manufacture and alteration being undertaken by third parties or the dress suppliers.

However, more and more of these business are now realising that not only should you do the dress, clothing and accessory retail but you should also do the alterations on site.

If you do this then it is something that you need to notify to your commercial insurance company because there are increased risks. The two main risks that are increased are public liability and employers liability.

Public liability is increased if for example during the alteration process you manage to injure the potential bride. You may think this is unlikely, but in our increasing litigious country, anything is possible.

The main increased liability risk is to your employees. There is much more chance of an injury to someone using a sewing machine, scissor and other alteration equipment than someone who is undertaking a purely retail role. Again, we are not saying it is a huge risk, but as ever the potential in there.

You need to ensure that your policy specifically notes that you undertake alterations directly, otherwise they could turn around and decline the claim.

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Restaurant insurance – EL is vital

Thursday, April 22nd, 2010

You have two choices when purchasing restaurant insurance, you either get a packaged policy or you get a bespoke policy inlcuding the sections of cover you specifically require.

Nine times out of ten, you will find that if you deal through a business insurance broker, you will be sold an off the shelf, package policy. This is the simplest, most economic way of arranging the cover.

However, in certain cases your broker may decide that the best way for you to cover, or protect, your business, is to have a special policy built just for your needs. For example, if you have restaurant, with a shop and guest house, then this is not usually suitable for the package concept. You will need to have what is called a commercial combined insurance policy. Your broker will declare all the business activities that you undertake. The policy will have a section for the business description to be declared.

The insurer will include certain sections of cover as requested. If you have employees, even if it is just family members that “help out”, then you must have employers liability insurance. It is the brokers job to recommend to you the cover that you need. As part of this job, the broker will recommend that you have employers liability cover in force.

As with every legal document though, you are obliged to look through the wording and to read and understand what cover is provided. Do not assume that the broker has not made any errors. Whilst the likelihood is very, very low that an error is made, you should always check that you have employers liability or EL, and that you have a certificate of employers liability.

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Public liability insurance – what is a reasonable excess?

Saturday, April 17th, 2010

We first of all need to look at what an excess is. If you take out public liability insurance, or any other type of insurance cover, you will receive a policy wording and a schedule of insurance.

This can either be in hard copy format or it will be sent to you electronically. Legally, in the UK, you must receive these two documents within 30 days of your insurance cover starting. Or, such confirmation of insurance cover to satisfy you that the insurance protection is in place.

Within your policy wording there will be many terms, conditions, warranties, exclusions and excesses. An excess is basically the amount that you will pay, or contribute towards any claim. Some insurance covers, such as employers liability, do not normally have excesses (unless you go to a real “fringe” insurer, which is usually not recommended).

The purpose of an excess is simply to save the insurers money by not dealing with and/or paying out on small value claims. If you are a carpenter and have public liability insurance, your insurers do not want to pay out because you dropped a hammer and caused £5 worth of damage to a tiled floor.

So, insurers apply different levels of excess to try and prevent you from putting in low value claims. It is very, very important though that you do declare such losses to an insurer. As a worst case scenario, if you as a sole trader have had to pay out of your own pocket for 25 damage claims, all around £50-£100 in the last year, then the insurer has to know because this is worse than careless and only a matter of time before a major claim comes along.

A sensible excess for a trades policy (ie plumbing, building, bricklaying etc) is anything between £100 and £250. Most commercial insurance companies have a standard excess of £100, which can increase to £250 or even £500 if you use heat (ie blowtorches, blow lamps).

Any more than this, then it is time for you to look elsewhere as you really would expect your insurance to kick in for any damage claims over £250.

Posted in employers liability insurance, public liability insurance | No Comments »

Office insurance – staff using computers at home

Thursday, March 25th, 2010

Remote working, working from home, flexible working – whatever you want to call it, staff working at locations other than their main business address applies to most companies.

It may be only a day or two here or there with a laptop, or you could have staff that spend 90% of their time home working and only pop into the office once or twice a month.

Not only does this have health and safety and employment contract considerations, you also have to think about whether your office insurance policy provides suitable cover.

In the main there are two areas of cover that this affects. Firstly, employers liability insurance. As we all know, or should do, if you employ anyone then you need to have adequate cover in place, at a minimum limit of indemnity of £5,000,000. This should cover your employees wherever they are working, staff in the office, sales staff at a conference or employees working from home. Most policies will automatically include this as, legally, you are not allowed to have too many restrictions on EL cover. But, some of the fringe insurers, who shall remain nameless, do have a few sneaky conditions. Make sure though, that your broker is aware that you have staff potentially working throughout the UK.

The second point is for your business assets. You need to have an “all risks” section that covers laptops, IT, smart phones etc so that if they are stolen from an address other than the office, you have cover in place.

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Public liability insurance – what is it and do I need it?

Saturday, March 13th, 2010

Everyone understands the phrase “you are liable”. This means you, or a third party, are responsible for something.

When we start to talk about the legalities of this, we think about public liability insurance, which can be confusing for a business.

The first thing to ask is, what exactly is it? Simply put, it is your legal liability for any loss, damage, disease or injury (physical or psychological) to any third party person or property. The key thing here is “legal” liability, whilst you may feel a moral obligation in certain circumstances, public liability insurance only applies if you can be proven to be liable, at law.

The second thing to ask is, do I need it? Maybe or maybe not. There is not the similar legal requirement to have the cover that applies to employers liability insurance. But, you may need it as part of a contract or because you want to protect your business in the event of a claim.

If you are unsure, call a broker to discuss their thoughts on whether you do need this cover and let them get you a comparative quote.