Policy Wording - Boring? Yes. But important. Of all insurances, those for Contractors are generally the most complex and most in need of specialist knowledge in their arrangement.
I am willing to bet: Your Contractors policy wording (Liability and Contractors All Risks) isn’t the best.
Why? Because you have your insurer’s standard policy wording and the range of disciplines in Construction is so diverse that a ‘standard’ policy document can only be designed as a ‘one size fits all’ – which as everyone knows means that in practice it doesn’t fit very well at all.
All brokers claim to ‘tailor’ your cover to your specific needs. But do they? Maybe. But I am sceptical. The policy wordings of potential clients cross my desk constantly and I rarely see anything but the insurers’ standard wording.
Three times in as many weeks I have examined the policy documents of prospective clients. Contractors with turnovers between £5M and £70M. All have policies issued by the mainstream, quality, insurers, – a mixture of Allianz, Aviva, AXA and Zurich – and all are defective for that particular insured. In two cases dangerously so, exposing them to existential risk. Yet simple changes the insurer would be happy to agree would remove the dangers and usually at no cost. How has this happened?
Look at our construction industry sector here
Put bluntly, their broker let them down. You don’t know the limitations of your policy, how could you? Unless you are very unusual you haven’t actually read it and wouldn’t completely understand it if you did. What you don’t know is that your broker is probably in exactly the same position!
Examples:
You have a contract expected to last 20 months but your policy has the standard limit for maximum contract period of 12 months. No cover for Contract Works.
Your business is groundwork and excavation. You routinely use sheet piling to protect trenches. Your policy has a piling exclusion. No cover for Liability.
You are a new build property developer. You sell a new house and a month after that a plumbing fault damages the electrics, floors and ceilings. Your policy has no ‘part product’ extension so the whole house is a single product. You have no cover.
You use and own a large amount of plant, with a rolling cycle of replacement, selling off the older plant. Either:
a) Your plant is insured on a standard Contractors policy. Claims are settled on an indemnity basis with no provision for 12, 18, or 24 month replacement as new
Or
b) Your plant is separately insured on an Engineering policy. Property held for sale is excluded
Not perfect either way.
Moral?
Use a specialist broker, not a ‘tailor’. We’ll check it out for you. For free!
If you have any questions then please
contact us on 01245 449060
