Plumbers are exposed to the same risks as other businesses and need to consider insurance protection for loss or damage to their assets, reduction in earnings and liability to employees and other parties.
The highest profile and most common of these for plumbers is liability insurance.
Liability insurance for plumbers is most commonly provided under a package liability policy. The minimum requirement for the policy is Public Liability, to which other covers can be added such as Employers’ Liability, Tools, Own Plant, Hired Plant and Contract Works.
What does plumbers public liability insurance cover?
Public Liability covers the legal liability for injury to third parties and damage to third party property arising out of course of the business. There is no standard limit of indemnity, with typical limits of indemnity offered by insurers being £1M, £2M and £5M, but different and higher limits are available. Cover is on a ‘claims occurring’ basis, i.e. the policy that meets a claim is the policy in force when the claim occurs irrespective of when the claim is actually made. Contracts can impose a minimum limit of indemnity which will need to be met to comply with the requirements, local authorities are known to demand high limits of indemnity so extra caution should be taken in dealings with them.
What is employers liability insurance for plumbers?
Employers’ Liability is a legal requirement where there are employees and covers the employers’ legal liability for death, injury or disease to employees arising out of the course of the business. The standard limit of indemnity is £10M any one claim, costs inclusive and cover is on a ‘claims occurring’ basis. Employers Liability is not available economically in isolation unless there are a reasonable number of employees.
Plumbing is an old and established trade that is well understood by insurers, meaning there is large and competitive market for plumbers’ liability insurance. The pricing is normally on a per capita basis, i.e. the premium is calculated using the number and category of persons covered, but some insurers will calculate the premium using estimated wageroll and turnover.
On the face of it, the various competing policies look similar leading to the purchase decision being made principally on price. However, as with most contractual relationships, the devil is in the detail and insurance quotations need to be scrutinised carefully to ensure the terms and conditions proposed are suitable for the risk it is intended to cover. The common areas of concern are:-
- Heat Work Conditions – Policies contain conditions regarding working practices and precautions that must adhered to when using heat in order for the policy to be operative. The requirements need to be understood and followed, otherwise claims will not be paid.
- Location Restriction – Policies contain restrictions or exclusions in respect of the premises at which the Insured is covered to work. A policy may have an attractive price but may severely restrict the locations at which work is covered, e.g. cover work at domestic premises only. Insurers may consider extending their standard cover to include higher risk premises on request and at additional terms and/or premium.
- Excess – This is the amount the Insured has to contribute in the event of a claim. The excess amount is not standard and can vary greatly from insurer to insurer, and needs to be taken into consideration when comparing quotations.
The ‘claims occurring’ nature of the cover needs to be considered when cancelling or lapsing cover, as claims that occur after a policy has been lapsed or cancelled will not be covered even if the claim arises from work undertaken at a time cover was in force.