We had another case this week of what is becoming more and more common in the contractors insurance market
I had a builder call me who wanted a quote for his liability policy ….. i asked him what works he carried and and he responded with, lofts,extensions and general refurbs.
I said, great, we can help you here, how much are you paying at the moment and what are you presently covered for.
The prospect client came back with a figure of £380 for his annual premium and said he had a liability policy he had purchased on line.(immediately i was shocked by the low premium and knowledge of under insurance).
So quite a few things alerted me here … so where shall we start.
Ok he was a builder and he was carrying out contracts on clients houses. A loft conversion and an extension is not part of the house, it is part of a new contract which is being built by the builder.
As this builder only has a public liability policy, all he has been covered for when carrying out previous works is damage to third party property … so yes if he does damage the existing structure …. he is insured, BUT as he is doing works outside of the existing structure, with a loft or an extension,if that contract was to burn down or be ripped apart or flooded by storm damage, the builder would not be covered.
The other alarming and disappointing factor here is the contractor has just taken out a liability policy on a comparison site, without seeking professional advice from a broker, to rattle through everything he would need to protect his business.
Trading in a naive way like this is not fair on the client, as they are expecting the builder to do their works with full Contractors All Risk Insurance in place.If something had of happened to the lofts or extensions he has been working on,what would have happened due to this builder being uninsured.
1 of 3 things, the builder has to pay out of his own pocket to rectify the situation, which on a large contract could be extremely costly. Trust me not many would.
The builder gets sued by the client.
The builder is totally rogue folds the company and disappears.
Making sure your Contractors Insurance will give you adequate cover
In this instance the builder was turning over 900k per year, had a manual wage roll of £300k and maximum contact length of 9 months. So how naive to think a £400.oo policy would have been sufficient.
We re-quoted the client on an insurance for a Contractors all Risk policy, educated him and drilled in the benefits of having this policy, not only to him but also he is clients. The premium is now £2800 and he is fully covered and also has a policy he can proudly show the client and explain to them exactly the areas he is covered for when taken on a project.
