insurance view - mitchellcharlesworth.co.uk · damage whilst carrying out work for your firm? ......

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Insurance View

In this edition...

Do you engage subcontractors? See page 2

Loss Recovery Insurance: Expert help when you need it See page 4

What is Engineering Cover? See page 6

Are Bonds & Guarantees right for me/my business? See page 8

SPRING 2017

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Insurance View | Spring 2017

Some firms will bring in subcontractors to work alongside them on their clients’ projects to provide additional work capacity and/or specialist capability.

For example the firm might bring in an electrician, plasterer, joiner, or plumber to carry out a particular job, or they might bring in an extra pair of hands to assist their own employees get the job done.

But what would happen if the subcontractor caused injury or damage whilst carrying out work for your firm? The subcontractor could cause damage to the client’s property or may cause injury to another at the client’s premises. The employer who engaged your firm’s services is likely to sue you for injury or damage, possibly in addition to suing the subcontractor. Their view? You have been engaged to carry out the work and the injury or damage was caused by a subcontractor you engaged.

So, if you were sued for the actions of your subcontractor, would your existing insurance policy cover you, or would you be left to engage your own investigation and legal defence and pay any resulting costs?

If you engage the services of a subcontractor, you should ensure your liability insurance policy protects you for his negligent actions as well and in many cases this will mean you need to extend your liability insurance policy to provide this cover. Your liability insurance policy will likely cover the actions of you and your employees only and not extend to cover the actions of subcontractors you engage as well unless this has been advised to your insurer when the policy commenced.

Initially you will need to consider the type of subcontractors you engage with, which will then determine the type of insurance cover you need:

Bona Fide Subcontractors (BFSC)

This type of subcontractor is also known as a ‘supply and fix’ subcontractor and is generally deemed to work without direction from the employer or main contractor; they will hold their own insurance and usually provide their own materials and tools.Typical characteristics in helping you determine if your subcontractor is bona fide include:-

• They have a contract of service rather than a contract of employment

• They are not working under your direction

• They hold Public Liability insurance in their own name

• They quote for work often at a fixed price

• They are not paid extra if the job overruns

• They provide materials, tools and men to carry out the work

• They may hire additional workers at their own expense

If you engage BFSC, you will not need to include them in the count as employees for Employers Liability insurance. However, you should consider disclosing the fact you engage BFSC to your insurer so they can consider widening your liability policy to include “contingency public liability insurance”. You can extend your policy to include cover for negligent actions of your subcontractors which would be in addition to the public liability insurance you carry which covers your legal liabilities of you and your employees. If you are then sued for actions of your BFSC, your insurance policy will respond.

A liability policy extended to include contingency cover will include a policy condition that you retain copies of the subcontractor’s public liability insurance which must provide the same limit of indemnity/cover level as your own.

If you engage bona fide subcontractors you should check this has been notified to us and your public liability insurance has been extended to include contingency cover.

Do you engage subcontractors?

If you engage subcontractors, you must ensure your insurance policy is extended to cover their activities whilst working for you as well. In the case of bona fide subcontractors, you must also obtain written evidence they carry Public Liability insurance to cover the activities they are carrying out for you and also check the cover is to the same level as your own insurance before engaging their services.



Labour Only Subcontractors (LOSC)

This type of subcontractor will work directly under your supervision and usually use materials and tools provided by you. Because they are working under your direction, they are treated in law as employees and this extends to short term/occasional workers you engage.

When you buy liability insurance for your firm, you must declare wages paid to LOSC alongside wages for your own employees to meet your legal requirements to provide cover for them under your Employers Liability insurance section of the policy.

Typical characteristics in helping you determine if your subcontractor is labour only include:-

• They are under your direction, i.e. you tell them what to do and how to do it

• They are paid by the hour, week, or month

• They can work a set number of hours

• You can move them from task to task

• You may pay them overtime and bonus payments

• They do not supply materials or tools (with the exception of own hand tools)

• They carry out the work themselves

If you engage labour only subcontractors you should check this has been notified to us and your employers liability insurance includes payments to them within wages projections you provide for your own employees.

‘Do you engage subcontractors?’ continued...

Richard Gorst Cert CIIDirector and Head of General Insurance

0151 423 [email protected]

For further information or to request a quote, please contact:

Carrie Arnold Cert CIIAccount Executive

0151 423 [email protected]


Loss Recovery Insurance: Expert help when you need it

What is Loss Recovery Insurance?

Loss Recovery Insurance is an insurance policy covering the services of a Chartered Loss Adjuster to provide unlimited on-site support to policyholders in the event of a claim. It is an invaluable service for small business or home owners, getting them back up and running quickly and efficiently when disaster strikes.

Why do I need loss recovery insurance?

Dealing with a large, unexpected loss can be difficult enough for SME owners, without then getting stuck in complex claims negotiations. Most policyholders don’t realise that it is their responsibility to work out the value of their loss and present a claim to their insurers, providing appropriate proof to substantiate their claim. This process can be very time consuming and requires expertise to ensure that the claim is resolved quickly and that settlement is arranged without complication.

Loss recovery is available for both business owners and private individuals, providing expert professional support and advice to assist you with getting back on track after material damage losses such as fires, floods, thefts and other disasters which can severely disrupt your business or lifestyle.

With loss recovery insurance a Chartered Loss Adjuster will be on site within 24 hours and on hand throughout the claims process, so business owners can get back to business rather than getting stuck in complex and frustrating negotiations with insurance providers.

A Lorega claims expert can also give you unlimited practical advice about things you can do to reduce the impact of a loss, or to organise quotes to start remedial work or replace damaged goods.

Loss Recovery Insurance covers Material Damage and Business Interruption losses from £5000 with no upper limit to the size of claims handled, and is provided by A rated insurers.

Who do Mitchell Charlesworth Insurance Solutions use for this service?

Mitchell Charlesworth work with Lorega for loss recovery insurance.

Lorega is the UK’s leading claims expert, Chartered Loss Adjusters, who work independently of your insurance company, to ensure your claim is settled quickly and fairly.

The key benefits to you:

• A quick response at the time of crisis

• 24/7 helpline, with call back within the hour and a guaranteed visit from a Chartered Loss Adjuster within 24 hours

• A dedicated and qualified Loss Adjuster to prepare and negotiate the claim from first notification to final settlement

• Peace of mind.

• Saves time and minimises disruption to your life or business. What assistance can a Chartered Loss Adjuster offer me?

• An on site visit within 24 hours to carry out initial assessment of loss, review policy terms and conditions and discuss strategy for the submission of the claim.

• Negotiation of the best available settlement under the terms of your policy

• Management of meetings and correspondence with the underlying insurer

• Arrangement of remedial works and surveyors if required

• Formulation and preparation of business interruption claims

• Arrangement of alternative accommodation

• Negotiation of interim payments (where appropriate) to allow lost or damaged items to be replaced

• Assistance in mitigating the loss and disruption to your business

• Provide advice on emergency repairs and salvage opportunities

• Protection of the environment which may be subject to forensic investigations by the insurer or insurer Third Parties

• Review security measures if breached, in respect of physical building security and employee/customer safety



• Initiate a disaster recovery plan (if applicable) and work with you to restore business including advising on Increased Cost of Working spends and Business Interruption recovery

• Advice regarding the appointment of specialist contractors and professionals including Quantity Surveyors, Architects, Engineers and then project manage the reinstatement process

• Prepare formal statement of claim with quantum breakdown for all aspects of Material Damage/Business Interruption loss

• Assistance in sourcing business equipment and arranging alternative premises.

• Prepare report for interim payment request to insurers

• Initiate/host all meetings with insurers, insurance company representatives and adjusters, and carry out regular reviews meetings to pro actively progress the claim

• Challenge insurers in respect of claims repudiations and reduced claims settlement offers where appropriate, including technical advice on under insurance, breach of warranty/policy conditions and other similar matters

• Work with you and insurer to negotiate and agree the optimum settlement with reinstatement/replacement in a manner best suited to your business or particular circumstances

How much will loss recovery insurance cost me?

Loss recovery policies start from as little as £35.35 per annum, dependent on the insurance policies you have in place.

To finalise a quote for loss recovery insurance please contact us on 0151 4237500 or email [email protected]

‘Loss Recovery Insurance: Expert help when you need it.’ continued...



What is Engineering Cover?

The term ‘Engineering Cover’ incorporates two types of cover:

• Engineering ‘Insurance’

Example: the fuel pump on your boiler fails and as a result several gallons of heating oil leaks onto the floor. You need to replace the carpet in the office and thoroughly clean the building.

• Engineering ‘Inspection’

Example: You have a range of electrical equipment in your building including control panels and fixed wiring. You need them to be regularly tested in order to comply with the Electricity at Work Act.

Who would typically purchase Engineering Cover?

Because of the vast array of equipment that these policies can cover, engineering cover is applicable to more industries than first imagined.

But do I need Engineering Cover?

If you have equipment which falls under the following categories, yes, you will be legally required to have it inspected periodically:

Lift/Crane Plant: Includes fork lift and pallet trucks, passenger and goods lifts

Pressure Plant: Includes air receivers and compressors, heating boilers

Power Press: Includes power presses, guillotines, injection/blow moulders

Local Exhaust Ventilation: Includes spray booths, fume cupboards, shot blast cabinets

Electrical & Mechanical: Includes control panels, alternators, refrigeration plant, gearboxes



What covers does the policy provide me?

Engineering cover will provide for regular inspection of the plant by qualified professionals who confirm it is fit for use.

More than simply a ‘would like to have’ insurance policy, engineering Cover insurance will allow companies to comply with the following Safety legislation:

• The Electricity at Work Regulations (EAW) 1989 (applies to electrical installations and equipment)

• The Provision and Use of Work Equipment Regulations (PUWER) 1998 (predominantly but not exclusively machine shop equipment)

• The Lifting Operations & Lifting Equipment Regulations (LOLER) 1998 (applies to lifts and lifting equipment)

• Control of Substances Hazardous to Health (COSHH) Regulations 2002 (as amended) (applies to local exhaust ventilation equipment)

• The Pressure Systems Safety Regulations (PSSR) 2000 (certain pressure systems containing steam, gases or liquids)

What does it cover me for?

1. Explosion or collapse of boiler or pressure plant caused by steam or other fluid pressure.

2. Breakdown of mechanical or electrical plant.

3. Damage to plant that requires immediate repair or replacement to enable normal working.

4. Sudden and Unforeseen Damage such as Explosion, Collapse, and Breakdown.

5. Deterioration of refrigerated stock.

6. Lifted goods- Damage to property belonging to you or in your custody whilst it is being lifted by an item of Plant such as a forklift truck.

7. Storage tank contents-Loss of contents of tank and associated clean up costs. This excludes damage caused by evaporation, seepage or normal trade loss.

8. Contractors’ plant-Covers the insured’s own plant and equipment on an ‘All Risks Contents’ basis. Can also be extended to include cover for loss or damage caused to hired-in plant and continuing hire charges applicable to the plant if damaged.

What doesn’t it cover me for?

These are some of the exclusions that apply to Engineering cover:

• Loss caused due to Corrosion and Erosion

• Consequential Loss (except Own Surrounding Property Damage)

• Perils covered by Contents or All Risks Contents cover

• Inadequate maintenance

• Known defects

• Product recall

• Plant undergoing testing or repair

• Wear and tear

Are there any types of equipment the policy can’t cover?

• Glass or non-metallic parts

• Bulbs, thermionic valves, electric heating elements, photo electric cells, transistor, cathode ray and x-ray tubes

• Track rails, wear plates, cutting edges, crushing, grinding or hammering surfaces, cutting shaping or drilling tool

How much cover do I get?

The limits of cover are set by you and should be the replacement value of the insured items.

How can I check what items I need to cover?

We are able to provide you with a guide on which equipment types need compulsory inspection under the Health & Safety Regulations, the frequency of these inspections and associated costs.

For further information please contact us on 0151 4237500 or email [email protected]

‘What is Engineering Cover?’ continued...



Whilst the information is believed to be true, the communication may not be comprehensive and recipients should not act upon it without seeking professional advice. Office address: Glebe Business Park, Lunts Heath Road, Widnes WA8 5SQMitchell Charlesworth Insurance Solutions is the trading name of Mitchell Charlesworth Insurance Solutions Limited which is authorise and regulated by the Financial Conduct Authority. The company is regulated in England and Wales number 7002662. Registered office: 3rd Floor, 5 Temple Square, Temple Street, Liverpool, Merseyside L2 5RH

Insurance Solutions Main Office:

WIDNES 0151 423 7500Glebe Business Park, Lunts Heath Road, Widnes WA8 5SQ

Mitchell Charlesworth Offices:

CHESTER 01244 32305124 Nicholas Street, Chester CH1 2AU

LIVERPOOL 0151 255 23003rd Floor, 5 Temple Square, Temple Street, Liverpool L2 5RH

MANCHESTER0161 817 6100Centurion House, 129 Deansgate, Manchester M3 3WR

WARRINGTON 01925 635141Victoria House, 488 Knutsford Road, Latchford, Warrington WA4 1DX

A bond is a legally enforceable financial guarantee given by a third party (the guarantor) to a purchaser (the client) to guarantee the obligations of a supplier of goods, works or services under a contractor. The guarantor agrees to pay the client a sum of money if the contractor defaults on its obligations. The purpose of a bond therefore is to assist a client meet their additional expenses they will incur to remedy any default and complete the contract.

There are various forms of bond which are used in the construction industry, , the most common of which is the Performance Bond, discussed in further detail below.

Performance bond

A performance bond will normally guarantee the client 10% of the total contract value in the event of the contractor or supplier failing to perform to the agreed terms of the contract, often due to bankruptcy of the contractor.

The performance bond is designed to ensure that the contractor performs the works in accordance with the building contract. If it does not, the employer will suffer a loss, for example because of delay.

A bond is not a contract of insurance, so risk is not transferred to an insurer. A bond is issued on recourse terms, so if the performance bond is called upon to pay the client, the insurer is still entitled to seek reimbursement from the contractor.

Are Bonds & Guarantees right for me/my business?

Whilst bonds and guarantees are commonly used in the construction and civil engineering industry, they are now becoming increasingly common to underpin other types of contractual obligations or meet statutory requirements. Bonds are typically arranged by a bank or an insurance company (via their surety department). The main advantage of arranging a bond with an insurer is it will prevent tying up your working capital. Bonds arranged with insurers can also be an easier process than via banks.

Contact Us

Mitchell Charlesworth Insurance Solutions can assist you should you be required by your client to arrange any type of bond used in the construction or engineering sector. Please contact us and we can arrange a quotation for you. You can either call us on 0151 4237500 or email [email protected]


insurance view - mitchellcharlesworth.co.uk · damage whilst carrying out work for your firm? ......

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