Business insurance

[IainB]

I've run a cleaning agency for 10 years. When we first arranged insurance, our broker asked us to send our agreements so they could be reviewed from an insurance perspective.

We've recently revised our agreements and diligently sent them to the broker for review. They initially replied that they couldn't provide legal advice, which is completely understandable. I explained that I wasn't asking for legal advice or for them to approve the wording — only if there was anything in the agreements that, from an insurance perspective, could affect or prejudice our cover.

They replied saying they can't confirm this and that we should obtain legal advice.

I completely understand they can't advise on the legal drafting. However, I thought it was reasonable to expect them to tell us if anything about the way we operate or the wording of our agreements conflicts with the policy requirements or could affect cover.

Are my expectations unreasonable? If not, what would be the next step?

 

[ctrlbrk]

@Frank the Insurance guy

 

[WaveJumper]

As above Frank's your guy, but I would also think its probably more important to understand what's in the insurance docs ie what's covered whats not covered that should give you a pretty good idea if you are going to run into any issues if and when you might need to make a claim.

 

[Frank the Insurance guy]

Hi IainB - this is a difficult one. It really depends on the confidence of your broker in understanding contracts and how this relate to insurance. Unfortunately there are not many brokers that have the ability to provide this type of service. The most common thing I see is a broker response that simply says something like "the contract is suitable and liabilities in the contract are covered etc, subject to the policy terms & conditions" - this is not helpful and provides no advice at all! Everything is covered subject to policy terms and conditions.

You are right - Insurance Brokers are not lawyers.

However, it would be reasonable for them to support you, their customer, in understanding the policy cover they have arrange for you! They should be able to provide some guidance on how the insurance cover interacts with the contract.

You are a cleaning agency, therefore I would expect the contract to set out your liabilities for any physical loss or damage to customer property - including where this has been caused by your contractors. In modern contracts, you may also be liable in contract for breach of privacy or intellectual property rights - a Public liability policy is unlikely to provide this cover, or cover may be limited. The contract may include an indemnity to the customer if a claim was made against them for damage that you caused - an Indemnity to Principal clause in a Public Liability policy would cover this.

Happy to have a look for you, if you want to share your documents - my contact details below.

 

[fisicx]

@IainB your next step should be to switch brokers and engage with @Frank the Insurance guy.

Also…

Too many people don’t understand the difference between the broker and underwriter. But that’s a different discussion.

 

[Paul Kelly ICHYB]

Insurance Brokers are not lawyers.

I think we all get that, but why would a broker ask for a copy of the contract to initially insure the company?

...and then, not want to see it when the contract was updated?

 

[fisicx]

...and then, not want to see it when the contract was updated?

Incompetence?

 

[Frank the Insurance guy]

I think we all get that, but why would a broker ask for a copy of the contract to initially insure the company?

...and then, not want to see it when the contract was updated?

Could be various reasons - could be an insurer request originally, not broker request. Or change of personnel at the broker to someone who is not experienced/confident.

 

[IainB]

Could be various reasons - could be an insurer request originally, not broker request. Or change of personnel at the broker to someone who is not experienced/confident.

Yea, a different, less confident person at the broker.

 

[IainB]

Hi IainB - this is a difficult one. It really depends on the confidence of your broker in understanding contracts and how this relate to insurance. Unfortunately there are not many brokers that have the ability to provide this type of service. The most common thing I see is a broker response that simply says something like "the contract is suitable and liabilities in the contract are covered etc, subject to the policy terms & conditions" - this is not helpful and provides no advice at all! Everything is covered subject to policy terms and conditions.

You are right - Insurance Brokers are not lawyers.

However, it would be reasonable for them to support you, their customer, in understanding the policy cover they have arrange for you! They should be able to provide some guidance on how the insurance cover interacts with the contract.

You are a cleaning agency, therefore I would expect the contract to set out your liabilities for any physical loss or damage to customer property - including where this has been caused by your contractors. In modern contracts, you may also be liable in contract for breach of privacy or intellectual property rights - a Public liability policy is unlikely to provide this cover, or cover may be limited. The contract may include an indemnity to the customer if a claim was made against them for damage that you caused - an Indemnity to Principal clause in a Public Liability policy would cover this.

Happy to have a look for you, if you want to share your documents - my contact details below.

"The most common thing I see is a broker response that simply says something like "the contract is suitable and liabilities in the contract are covered etc, subject to the policy terms & conditions"
- This isn't that far off what I'm asking for.

We had a recent accident / possible claim - the loss adjuster asked about our onboarding process, recruitment, risk assessment etc. The self employed status of the cleaner was also checked. It seems we were ok but that also that we could tighten things up slightly - hence the changes.

We're definitely open to moving broker however it was difficult to find cover initially due to the cleaners being self employed as a lot of standard policies didn't seem to cover that. If it's something you might be able to offer, then we'd be interested in discussing for next renewal.

 

[Newchodge]

"The most common thing I see is a broker response that simply says something like "the contract is suitable and liabilities in the contract are covered etc, subject to the policy terms & conditions"
- This isn't that far off what I'm asking for.

We had a recent accident / possible claim - the loss adjuster asked about our onboarding process, recruitment, risk assessment etc. The self employed status of the cleaner was also checked. It seems we were ok but that also that we could tighten things up slightly - hence the changes.

We're definitely open to moving broker however it was difficult to find cover initially due to the cleaners being self employed as a lot of standard policies didn't seem to cover that. If it's something you might be able to offer, then we'd be interested in discussing for next renewal.

The problem may be that the cleaners are not legally self employed, but are in disguised employment. Insurance brokers may find that awkward.

 

[IainB]

The problem may be that the cleaners are not legally self employed, but are in disguised employment. Insurance brokers may find that awkward.

The cleaners are legally self employed.

 

[pentel]

The cleaners are legally self employed.

Really pleased that you are flexible enough that they can chose when they work and can send someone else to do the work if they want to. Most sensible self employed people have their own insurances.

 

[Newchodge]

The cleaners are legally self employed.

Then they should have their own insurance.

 

[WaveJumper]

Opening a can of worms now, whole new ball game if the people are self employed

 

[ctrlbrk]

Then they should have their own insurance.

Cyndy, does that apply also if you're a contractor working for an umbrella company?

 

[Newchodge]

Cyndy, does that apply also if you're a contractor working for an umbrella company?

I would think so, anyone self-employed should be insured against causing damage for their client. Although when I said 'should have' I did not mean it was legally required.

 

[IainB]

Thank you for the comments. I understand that employment status affects insurance risk and that the two are linked. However, our specific structure is a settled matter that this broker has happily underwritten for a decade.

For clarity
- the cleaners operate on a self employed basis, work for multiple clients, choose which jobs they accept, which hours they work, can send replacements if they and their clients choose, and are responsible for their own tax and insurance.
- We use a proven model very common in the domestic cleaning sector, with agencies / franchises such as Time For You, Diamond Home Support and Maid2Clean covering 00s of UK businesses.
- This broker has covered us under this exact model for 10 years. Our compliance status has not altered.

My original question wasn't about employment status. I'm trying to understand why the broker insisted on reviewing paperwork when we launched, told us to forward any changes for review but are then refusing to ok the documents. I feel that the broker should say if our paperwork (which basically describes what we do and how we do it) aligns with the insurance - or not.

 

[Paul Kelly ICHYB]

However, our specific structure is a settled matter that this broker has happily underwritten for a decade.

But the issue of self employed/employed has become more contentious in those 10 years and maybe the broker isn't up to speed.

If there is an issue and this has not been picked up, your insurer might try to subrogate to you sub contractor, who won't have insurance!