Frequently Asked Questions
Why do I need insurance?
There are three main reasons for buying insurance cover.
First, it may be compulsory for you to have a particular insurance cover.
Second, is to provide you cover for the cost of any loss or damage that you may be responsible for following an incident. Without adequate insurance cover you expose yourself and your assets to legal proceedings from any potential claimant.
Third, is to enable you to meet the minimum criteria set down in many contracts of work that are tendered for by your industry. Many tender documents, especially those issued by the financial institutions, stipulate that all contractors must have adequate Professional Indemnity and Public Liability Insurance. Without these covers in place, it is highly unlikely that you will be successful with your tender.
Professional Indemnity Insurance is a “claims made” policy, what does this mean?
There are two types of cover, “claims made” and “claims occurred”. Claims occurred, is the more common. This means that when an incident occurs causing loss or damage it is the insurance policy that was in force at the date of the incident that will pay for the claim. So if you have a “claims occurred” insurance policy from 1 January 2010 to 1 January 2011 and a claim occurs during those two dates then irrespective as to when the claim is made on you (subject to statute laws), be it 2010 or 2019 the insurer of the policy as at January 10 to January 11 will pay the claim.
With a “claims made policy”, this type of policy covers you when a claim is made on you as opposed to when the incident occurred. If you were insured 1 January 2010 to 1 January 2011 and an incident occurred during this time and the claim was made on you during this time then the insurer of this policy would pay the claim. However, if the claimant did not make the claim on you during 2010 to 2011 and waited until 2012 then it would be the insurer who insures your 2011 to 2012 policy that would pay the claim, even though the incident occurred in 2010.
So it is important with claims made policies that you continue to purchase the insurance cover every year. If you stop purchasing the insurance cover and a claim is subsequently made upon you, for an incident that happened a few years prior, when you did have insurance, then you will not be covered for the loss. This is because at the time that the claim was made on you, you did not have any professional indemnity insurance cover in force.
What happens when I want to retire or sell my business, do I still need insurance?
Yes, you can still be sued and as such you will need to ensure that you continue to have Professional Indemnity cover. You can purchase cover known as “run off” cover and you will need to keep buying this cover for at least seven years and possibly longer.
I’m not insured and I still get work, why?
It is true, many businesses and sole-traders are uninsured, and they do still receive work, however if insurance is already or becomes compulsory you will need to obtain insurance. Also with so many changes to various laws and regulations it has been very difficult for businesses to keep on top of them all. However, as new laws and regulations become part of everyday business, your clients will begin to enforce those laws and regulations. You may have received requests from a client or contractor for you to produce evidence of insurance, if you have and you do not comply with their request, you do run the real chance of being struck off their panel of approved service providers.
I am a sub-contractor and I do work for different contractors, am I covered under their insurance?
You will need to ask your contractors for a copy of their insurance policy schedule and certificate of currency. If they confirm that they have named you on their policy then you would be covered. However, if you are sub-contracting to a number of contractors then they may not be able to include you under their own policy. It is probably best to err on the side of caution and presume that you are not covered, until such time that they provide proof that you are.
I am a sub-contractor named on one contractor’s policy, but I do work for different contractors. If I have a claim with any of the other contractors can I make a claim under the first contractor’s policy?
No, if you are named on the first contractor’s policy then you will only be covered for work or services provided or performed for and on behalf of that contractor and no others.
My contractor states that I am covered under their policy, is this possibly?
It is possible to be named as a sub-contractor on a contractor’s policy however you must request a copy of the contractor’s certificate of insurance and ensure that you have been named on the policy. You must also seek clarification as to what cover you have been granted and how long you will be covered for and that the insurance company will cover all your sub-contracting activities.
My contractor charges me a small fee to be covered under their policy?
With regards to paying a contribution towards this cover there are issues surrounding whether this would be deemed selling insurance. Even allowing for a contractual relationship the important thing to remember is that you will only be covered for Professional Indemnity whilst you remain named on that policy, once you cease being named your cover will stop.
With Professional Indemnity insurance there is no such thing as being covered for the job. You are only covered if a claim is made on you and even then only if you hold an insurance policy at that particular time. If you did a job four years ago and are no longer named on that contractors policy or have not taken out your own professional indemnity insurance cover and you receive a claim today then you will have no cover. So the question to be asked is, what cover are you actually paying for?
I am not insured and I keep receiving letters from my contractor to provide proof of insurance, why?
Your contractor may wish to ensure that all their sub-contractors are insured, hence the request. They may have won a contract that insists upon all contractors & sub-contractors having adequate insurance cover. They may be assessing their panel of sub-contractors, with a view to only using those sub-contractors who have insurance. If you are regularly receiving requests then it probably means that the contractor requires you to be insured.
I’ve received those letters too and just ignore them, why all the fuss?
Business is becoming more regulated by the day and what is required to meet your compliance obligations is costly and time consuming. If you choose to ignore those letters, then they will probably stop coming, but don’t be surprised if the work also stops coming. Having adequate insurance is now the norm and will soon be compulsory and if you want to continue working or to win tenders in your own right then you must give serious consideration to getting insured.
I did a job last year and now my contractor claims I made an error and that they are being sued and they intend to sue me too, can they do this?
As a general rule anyone can bring legal action against another party, if they have just cause. It will be for the Courts to determine if they are right. If your contractor is alleging that they are being sued because of an error directly attributable to you then you must ask for full details of the allegations being made and seek documentary evidence to support those allegations. If the alleged error is due to a breach of your professional duty then you should immediately report the matter to your Professional Indemnity insurer.
I regularly use sub-contractors to undertake my work how can I check to see they are insured?
We have developed a sub-contractor questionnaire that can be used to send to all of your sub-contractors, which requests information about their Insurances, Licences, Qualifications, Police and Bankruptcy checks. Please contact us for further information.
I regularly use sub-contractors who are uninsured, what’s all the fuss about?
Apart from that fact that some insurances are compulsory, if you have a contract of work that stipulates that you must have insurance and you use uninsured sub-contractors to do that work then you could be in breach of the contract. Where you have a contract stipulating insurance then it would be wise for you to undertake reasonable enquiries of your sub-contractors to ensure that they have appropriate and adequate insurance.
If you use an uninsured sub-contractor and they are the cause of loss or damage to another party or they commit a professional breach then you may be vicariously brought into the matter as they may be deemed to be working as your servant or agent. If they are uninsured you could end up paying the claim and although you may have a right of recovery against them, if they are a “Man of Straw” you could end up wearing the loss.
Is it true that I could lose a contract of work, because of using uninsured sub-contractors?
Yes, it is a very real possibility that if you win a tender that stipulates compulsory insurance and you subsequently use uninsured sub-contractors to do the work you could be in breach of the contract and you could lose it. Contracts stipulating insurance are often linked to your client’s own compliance and regulatory requirements and your failure to comply with the contract means that your client may fail to comply with their compliance, which could have serious ramifications for all concerned.
Am I able to cover my sub-contractors under my policy?
It all depends upon the type of policy and the willingness of the insurer to allow you to name a sub-contractor. Generally insurers do not extend policies to cover sub-contractors, preferring that they go and obtain their own cover.
Sub-contractors can be covered under some of our Scheme policies, however a charge may be applied depending upon the Scheme.
Are any of the Schemes under a Master Policy?
No, the policies under all our Schemes are individual limits of cover, for each and every insured and are not shared.
Master Policy, what does this mean?
A Master Policy provides a set limit of cover that is shared by all the insured entities participating in that policy, irrespective of the number.
What are the Pros and Cons of a Master Policy Limit?
Master Policies are designed chiefly to drive premiums down, however sharing a common limit means that the maximum that the policy will pay is the stated limit. As such the risks to the insurer are lower and this is reflected in the lower premiums that the insurer will charge. The draw back of a shared limit is that if many claims were made on the policy then the cover limit could be all used up.
The advantage of a shared limit of cover is that the price is dramatically cheaper than that of an individual cover of an equal amount. Master Policies benefit groups that have a very good claims history and limited funds to pay for insurance
I want to join the scheme, but what about my existing insurance, can I cancel it?
Yes you can cancel your existing policies and seek a refund of the unexpired premium. We recommend that you first make enquiries about the cancellation process and ascertain how much return premium you will be entitled to. You can then seek to be placed on cover with our policy and then proceed to cancel your other policies.
Can I pay my premium by instalments?
Yes, you can pay your premium by monthly instalments by using a facility called premium funding. Additional fees and charges apply, but this does enable you to pay your premium over a number of months.
Why are the scheme insurance covers and limits set at the levels they are?
The main purpose of the scheme was to provide all members with adequate insurance cover for the risks that they face.
Do I have to be a member of an Association to access the insurance facility?
No, it is not a requirement that you become a member of any association in order to access the insurance facility.