Fully Insured?

I followed a van whilst driving the other day and noticed the sign writing on the rear doors that proudly stated the building company was fully insured. I always have to smile when I see this bold claim on any piece of marketing given that, I am 100% certain that this statement cannot be true.

(I do apologise if this van is owned by you and I do appreciate the message that you are sending out to your potential customers.)

I am sure, if they have appointed a competent and professional broker that they will have a good range of suitable insurance policies to back their no doubt excellent work ethic. However, to go as far as to indicate that whatever might happen they will have a friendly insurer standing behind them is misleading.

As an individual or company considering using the said building contractor, we would be most interested in the insurances that protected them against third-party claims. I would expect them to have standard public and products liability insurance, possibly professional liability cover (if they are involved in any design or specification work) and possibly even management liability cover to protect against allegations of wrongdoing by the directors. All of these insurances will come with a limit beyond which the insurers will not fund claims. I would hazard a guess that unless they have specifically been asked for a greater limit they would carry no more than £5 million cover (possibly much less). Whilst this may be suitable for them and provide adequate cover in almost all situations, given that the highest current personal injury award in the UK courts has been £24 million, there is always the possibility that a claim will exceed their given limit. Add to this, the exclusions and conditions that will apply to all insurance contracts, there is always the possibility that any policyholder may fail to be indemnified by their insurers for any given claim.

As an employer of contractors you should also consider their first party insurances covering their own tools, machinery and equipment along with materials provided for your job. Business interruption cover may be required following damage or loss of any of these items and the absence of any of these covers could lead to the contractor concerned going out of business following a loss and being unable to complete your contract.

Never believe any marketing line that tells you that any business you expect to engage with is "fully insured". Ask to see copies of insurance policies and always take a healthy dose of salt with these sorts of statements.