Contractors Combined Insurance is aimed at businesses where all or the majority of work is carried out away from their premises such as the construction industry, cleaning contractors, security contractors or agricultural contractors.
Liability cover – Employers’, Public and Products – is standard with most insurers offering Contractors All Risks cover as an optional extra. Liability insurance provides cover for injury (or death) or damage to property arising out of your business activities. Employers’ Liability applies in respect of your own workers or sub-contractors with Public Liability applying to anyone else, typically members of the public. These are legal liability covers and so the injury or damage must be as a result of your negligence or defective workmanship for a claim to succeed.
Employers’ Liability insurance is one of the few statutory covers (along with Road Traffic Act Liability & Engineering Inspection) and must be arranged if a business has any workers or labour-only sub-contractors regardless of whether they are full time, part time or casual, paid or unpaid. Very large businesses may source Employers’ Liability cover in isolation but in general it is written as part of a package along with Public and Products Liability.
The premium for Liability cover is generally calculated in one of two ways; either charging a flat rate per person to be insured, known as Per Capita, or by applying a percentage rate to the estimated Wages & Turnover. Per Capita policies tend to have lower minimum premiums, if any, & are ideal for smaller businesses with only a few workers/contractors. However they can become uneconomic for companies with more than, say, 5 to 10 workers. Most Contractors Combined policies are written on a traditional Wages & Turnover basis with estimates for these figures being provided to insurers at the start of the policy and then adjusted by declaration at renewal when the actual figures paid/achieved during the year are known.
The premium charged for Liability cover depends very much on the work being undertaken. Any activities at height, or at depth, involving the use heat or potentially dangerous equipment/chemicals will obviously attract a higher rate. Any such works will need to be disclosed to insurers at the start of the policy. Failure to do so may render the insurance null & void in the event of a claim.
Contractors All Risks (known as CAR) provides cover for works in progress & any tools, plant or materials left on site including hired-in equipment. As the name suggests All Risks cover applies however there is normally a requirement for adequate site safety including security fencing and containers/site safes and increased excesses apply in respect of Theft or Malicious Damage claims.
Some specialist policies, such as those designed for electrical contractors, can include a range of extensions either as standard or optional extras and these include Inefficacy (failure of a product or system to perform its intended function), Defective Workmanship and Financial Loss. Many insurers also offer cover for Office Contents, Professional Indemnity, Directors and Officers Liability and Legal Expenses as part of their Contractors Combined package.