Get Your Liability Cover Right

Liability Insurance will affect every reader of this article in one way or another, if you're in business you should have liability cover as an absolute minimum.

It's not the intention here to educate you on the principals of liability; you would probably find it a bit of a snore! What I want to set out to do is point out where you may have a problem with your liability insurance. Getting your insurance right is not difficult; much of it relies on you telling the insurance advisor about your business and its processes, and its just as important for them to understand what it is you are telling them. It can be very difficult to explain to an insurance professional just what it is you do and where it is that you do it, and it is all too easy to just give a brief precis such as: "Oh i just make signs and fit them up where needed" and find yourself in all sorts of trouble because you haven't gone into the right kind of detail.

We see businesses frequently and unwittingly breaching policy conditions in the following two areas and therefore we decided this month to concentrate on them in some detail.

Surely this is not a problem you might think! You don't use heat other than your hot air gun, or let's use a more problematic word, hot air stripper. By all intents and purposes they are actually one and the same. So where is the problem? The fact that insurers recognise this type of equipment as a producer of heat and will either apply a "use of heat warranty" where they know and accept that you use your heat or, which can actually be even worse, exclude the use of heat altogether, and this will almost certainly exclude any losses arising from the use of hot air guns and strippers.

The following is a heat exclusion taken from a typical Per-Capita Liability policy: The company shall not be liable in respect of Bodily Injury or loss or damage to property caused by or in connection with the use of electric, oxyacetylene or other welding or heat cutting equipment, hot air guns, blow lamps or blow torches...or the use of heat elsewhere than at the insureds premises.

And this is a heat exclusion taken from a typical Liability Section of a Commercial Combined policy: We will not provide indemnity in respect of the use of any: Electric, oxy-acetylene or similar welding or cutting equipment, cutting and grinding equipment using abrasive disks or wheels, blow lamp, blow torch, hot air gun or hot air stripper, asphalt, bitumen, tar or pitch heater, thermal lance. Other than on premises owned, hired or rented by the Insured.

The first thing you need to do is check the liability sections of both your insurance policy and your policy schedule. Go to the liability section and more than likely if an exclusion exists it will be contained in the policy schedule and may be listed either as just "Heat Work Exclusion" in which case refer to the policy booklet and locate the applicable wording. You may also find it listed under Endorsements, Conditions, and Warranty. If no mention of a warranty or heat exclusion is evident and you do use heat away from your own premises - and especially on your customer's premises - you will need to obtain clarification from your insurance advisor. In a nutshell if you use heat away from your own premises and your insurers are aware of this fact they will apply a "heat use warranty".

A word of warning here is that, depending on who arranges your insurance, they may not be fully aware of the extent of the use of heat that some sign businesses are involved with. As always, if you are unsure as to whether the heat work away from your premises is included or excluded you must seek professional advice.

For clarification: a per-capita policy is based on the number of people working manually in your business, and is designed to cover third party property damage and injury. If you have this type of policy running alongside another property-based policy perhaps you should consider combining the two, the cover would certainly be wider.

This article mainly concentrates on liability covered under a Commercial Combined policy rather than a Per-Capita policy, for a checklist of possible exclusions under this type of policy go to http://www.signelite.co.uk/dontblameme

The type of premises you work on could also present you with a problem, putting aside the restrictions under a Per-Capita policy you need to ensure that the premises you work on are not causing you to breach your policy conditions. Almost all policies will have a "hazardous premises" exclusion, typical wording being:

We will not provide indemnity in respect of work on or in: power stations or nuclear installations/establishments, oil, gas or chemical refineries, bulk storage production premises, mainframe computers, aircraft, aerospace systems or hovercraft.

Watercraft other than work (not involving the use of heat on or in watercraft in docks, harbours, boatyards or inland waterways) railways or airports, underground or underwater.

Even though some jobs may involve little more than the fitting or replacing of a simple sign on a trip boat in a harbour, for example, many of you may find that your policy will almost certainly exclude it.

The main areas of concern are work on railways, airports and watercraft. If you work on or in any of these areas you need to notify your insurance advisor. It seems difficult to believe, but even fitting at an airport shop, a railway station or on a ferry may be excluded. The underwater exclusion may not affect you, you might think, but underground? The London underground, lower levels of shopping malls? When it comes to liability it is important that you are properly advised by people that understand just how varied your job may be and just where you might end up.

And so to recap: If you use any kind of heat in your work, including the use of hot air guns or hot air strippers, or you work on any of the premises listed above, or even if you are unsure about just what you are covered for, you need to make sure that your insurance advisor and insurers are aware of what you do and get reassurance that your policy covers your specific needs.