Claim Denied

Business Description – A Cautionary Tale

Does your business description on your policy documentation fully describe all your business activities? We often discover inaccurate or incorrect descriptions which could make a policy void in the event of a claim, we explain more .....

A man is working on a building site somewhere in Essex. A trained operator, he is digging a hole with a JCB excavator. Unnoticed by him a fellow employee climbs into in the hole and he catches him a blow on the chest and arm with the bucket of the machine then, panicking, he hits him again on the head. The man is rushed to hospital. He is severely injured and will never work again but he survives. The estimated cost of a claim is assessed at £2million. Shouldn’t happen but of course these things do from time to time and that’s what insurance is for, right? The employer, a subcontractor, has Employer’s Liability insurance for £10 million. But the insurer denies the claim. Why? Because the business description on the policy is ‘Bricklayers’ they say. That doesn’t include use of a JCB or excavation. No-one ever told them the insured might do this kind of work and they wouldn’t have insured him if they had known. So - over to the main contractor – he has overall responsibility for site safety and has Public Liability insurance for £5million. But ‘not us’ says his insurer – the policy has conditions around the use of sub-contractors, you must check that they are insured for the work to be undertaken – they weren’t and you didn’t.

The main contractor and sub-contractor are both out of business.

Related Article - The use of Subcontactors Lessons? • Spend attention on your business description within the policy.  You must ensure that all possible activities are included and your broker must ensure it is consistent over all policies. • Discuss with your broker any conditions that apply to your policies and make sure you can reasonably meet them. Remember, these conditions are standard for all buyers of that policy with your insurer and your broker may be able to negotiate changes in your own case. Case Study Ascend was asked to review the insurances of a well known leisure complex. To our amazement none of the client’s major policies had the same business description and none adequately catered for the full range of their activities. Although not the sole reason for our appointment – we improved cover and saved money too - the client’s comment was that our understanding of their business swung it for us.

And if you have purchased a policy on an online quote engine - check it, check again and possibly then keep your fingers crossed!

Related Article - Free Technical Review Service We can provide you with an honest review, not on pricing, but a detailed overview of what you should have cover for and where you may have weaknesses in your existing arrangements - find out how here Contact us today to find out more 01245 449061

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