In these uncertain times, people are naturally looking for ways they can cut back on spending and reduce costs. Many business owners will consider reducing their insurance premiums whether that means reducing or even cancelling their insurance cover to save money. Our team have been offering their experience and advice so our clients can make the most informed decision.
We are aware that tradespeople, such as plumbers and builders, are amongst the most likely to cancel their insurance cover, especially liability policies. However, these are precisely the sorts of businesses that will have exposure to residual liabilities.
Before reducing or cancelling cover, we advise sole traders to consider the following:
The contractor may still be responsible for any loss or damage to half-completed works left with the homeowner. They will certainly be held liable for any injury that arises from their works.
Tools & Plant
The contractor may no longer see the value in cover for tools or plant while they remain unused during lockdown. However, it has come to our attention, that criminals have been exploiting unoccupied construction sites (both small and large) to steal plant. In these uncertain times our advice is to keep tools and plant insured and comply with policy conditions regarding security.
Public Liability / Products Liability / Contract Works Defects Liability
These liability policies carry on working even when you are not. Even after work is completed, there is still a period of time during which risk remains present. Escape of water, collapse or electrical fires can still occur months after contractors have left a site. It is therefore important not to cancel liability policies because they must be in force at the time of loss.
For example, if a plumber installed a pipe on the day their liability policy was due to expire and then the pipe burst the following day, the date of the loss would be the date the damage happened and not the day the pipe was installed. Therefore, if the plumber chose not to renew their liability policy, they find themselves without the appropriate cover for this loss.
Members of trade bodies or schemes
Members of bodies or schemes such as Trusted Trader or Constructionline, for example, are contractually obliged to have Public Liability insurance in place. Some schemes guarantee work for their members, so if the worst does happen, and the member is uninsured, the customer could revert to the trade body. This could have implications for the contractor's future membership.
You may also find our COVID-19 resource centre useful. This has been created to house all important news and information to update you on the potential implications for your business. The resources are updated daily as the situation develop, so please check back often.