Liability Insurance – terms you should know

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Every insurance policy contains detailed terms and conditions.

The following is an overview of some of the most important terms and conditions typically found in contractors liability insurance policy documents.

Please submit your questions at the end of this blog.

Adjustable Premium
Liability Insurance policies are rated on turnover, payroll & payments to subcontractors (or in some cases employee numbers). You will be required to make a projection of turnover, wages and payments to subcontractors (or number of employees) at the inception of the policy and a declaration at renewal. If the declared figures are higher than the projections then an additional (adjustment) premium will be due at renewal.

Minimum & Deposit
The premium paid for liability insurance is often ‘minimum and deposit’, which means that insurers retain 100% of the premium even if the policy is cancelled mid-term.

Excluded Activities
A standard liability policy will exclude
– Any work of demolition unless such work forms part of a contract for rebuilding alteration, maintenance or repair and is carried out using handheld tools. A height limit of 5 metres may also apply.
– Construction, Alteration, Maintenance or repair of: Bridges, towers, steeples, chimney shafts, blast furnaces, viaducts, mines, dams or transport tunnels, canals, docks, piers, wharves, airports, aerodromes, aircraft, watercraft, quarries, railways or railway installations, chemical works, oil refineries or fuel depots.
– Pile driving, water diversions, tunnelling, quarrying, use of explosives or sub aqua work.
– Working with or exposure to Asbestos.
– Use of explosives.

Liability Assumed Under Agreement
Liability assumed under agreement is normally excluded unless liability would have attached in the absence of such agreement.

Bone-fide Subcontractors Condition
Liability policies will normally carry a condition that a copy of liability insurance is kept on file for all Bone-fide subcontractors. Insurers may refuse indemnity in the event of a claim where a bone-fide subcontractor is involved and you do not have proof of their insurances on file. Minimum limits of indemnity may be required on subcontractors insurance covers also.

Business Description
The business description must be accurate and include every activity of the company. For example, a building contractor is insured to carry out scaffolding as part of an overall contract but he is not insured to carry out scaffolding as a separate trade. To do this he must be insured as a building & scaffolding contractor.

Excluding Motor Cover
A standard liability policy will exclude cover for mechanically propelled vehicles where compulsory insurance cover is required by the road traffic act. This can include vehicles working in or around roads, car parks or any other area to which vehicles have access.

Height & Depth Limit
The majority of liability policies carry a height and depth limit.

Safety Statement Condition
It is often a condition that an up-to-date safety statement is in place as required by relevant  legislation.

Claims Procedure
There is normally a claims procedure clause which specifies action to be taken in the event of an accident. The most important point is that accidents are reported as soon as possible.

Hot work warranty/exclusion
Hot work such as welding may be excluded. If it is not excluded, there are normally some burning and welding conditions which must be followed.

Underground Services Warranty
Most policies contain this warranty. It specifies a number of precautions which must be taken prior to digging or excavation work. Damage to pipes or cables is generally covered subject to compliance with this condition.

If you would like a quotation, please call us on 049-4332944, e-mail or complete our online enquiry form.

Disclaimer: The material contained is this article is for general information purposes only and does not constitute professional advice.

James Martin
James Martin
James Martin has 16 years of experience as a general insurance broker. He is a member of the Chartered Insurance Institute and has completed a Diploma in Corporate Finance.

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