Combined Liability Insurance

Combined liability insurance is intended to place relevant business liability risks within one coordinated policy. The sections included are determined by the insurer and the needs of the business rather than by one universal definition.

Public liability can deal with eligible claims from third parties alleging injury or property damage. Employers’ liability can address certain claims from employees, while products liability may protect against claims arising from products that a business manufactures, supplies, distributes or sells.

The benefit is that connected liability exposures can be reviewed together. This is particularly useful for businesses whose activities involve employees, customers, work at third-party premises and the supply of goods.

Public liability and employers’ liability protect against different types of claims. Public liability is concerned with eligible claims made by third parties, such as customers, visitors or members of the public, where the business is alleged to have caused injury or property damage.

Employers’ liability relates to certain claims from employees who suffer injury or illness arising from their work. A business can therefore have an exposure under both sections even when the same workplace or activity is involved.

When arranging combined cover, it is important to describe the workforce accurately and explain where and how work is performed so the insurer can consider the relevant exposures.

Products liability can be relevant to more businesses than manufacturers alone. Importers, wholesalers, distributors, retailers and other companies within a supply chain can face allegations that a product they provided caused injury or damaged property.

The insurer may want to understand what products are handled, where they are sourced, who uses them and where they are sold. Businesses importing goods or supplying products with particular hazards may require more detailed underwriting.

A combined policy can place products liability alongside other business liability sections, helping the company review its exposure from both day-to-day operations and goods placed into circulation.

Many trades and service businesses spend little time at their own premises. Employees may instead work in customers’ homes, factories, offices, shops, warehouses or on construction sites, creating liability exposures wherever the work takes place.

The insurer should be told about the nature of this work, the locations involved and any activities that are unusual or higher risk. Certain operations may be restricted, excluded or subject to specific conditions.

Contract requirements should also be checked. Customers and principal contractors can request evidence of liability insurance and may set minimum limits as a condition of allowing the business onto a site.

The position of subcontractors depends on how they are engaged and what responsibility the business retains for their work. Labour-only subcontractors and bona fide subcontractors may be treated differently by insurers, so they should not simply be grouped together without explanation.

Insurers can ask about payments to subcontractors, the work they undertake and whether they maintain their own insurance. Contractual arrangements and supervision may also affect how the exposure is viewed.

Giving accurate information about subcontracted work helps ensure the policy reflects the actual way the business delivers its services rather than only its directly employed workforce.

Commercial contracts often specify the type and level of liability insurance a supplier or contractor must maintain. Requirements can include particular public liability or employers’ liability limits and may vary significantly between customers.

A policy should therefore be checked against the contracts the business expects to accept. Simply having liability insurance does not automatically mean every contractual insurance condition has been satisfied.

Where a new customer requests a higher limit or an unusual condition, it is sensible to discuss this before agreeing to the contract so any necessary changes can be considered with the insurer.

There is no single public liability limit suitable for every company. The potential severity of an accident, the nature of the work, the types of property worked on and the requirements of customers can all influence the level selected.

Some businesses choose a limit because it is required by a contract, landlord, trade body or principal contractor. Others need to consider the possible financial consequences if their activities cause a serious injury or substantial third-party property damage.

The limit should be reviewed as the business changes. Moving into larger contracts, higher-risk work or new sectors can alter the level of liability exposure even if the core service remains similar.

A quotation starts with a clear description of what the business does. Insurers can ask about annual turnover, payroll, employee numbers, use of subcontractors, work locations and the proportion of income generated by different activities.

Where products liability is relevant, details of the goods manufactured, imported, distributed or sold may also be needed. Previous claims, overseas work, hazardous activities and contractual requirements can affect the terms offered.

Accurate information is important because a short business description may hide material differences in risk. Two firms using the same trade name can undertake very different work and require different insurance arrangements.

Liability insurance should not be assumed to pay simply for correcting defective work. Policies are primarily concerned with insured liability claims, and exclusions can apply to the cost of replacing or rectifying the work or product itself.

The position can differ where faulty work causes additional injury or damage to other property. Whether a claim is covered will depend on the circumstances and the wording of the policy.

Businesses concerned about workmanship, design, professional advice or contractual performance should explain these exposures when arranging insurance rather than assuming a standard liability section will respond to every commercial dispute.

A company may carry out more than one activity. For example, a contractor might install equipment, carry out maintenance and sell replacement parts, while a retailer may also deliver, assemble or repair products.

All material activities should be declared to the insurer. The premium and terms can reflect the relative amount of work undertaken in each area, particularly where one activity creates a greater liability exposure than the others.

Adding a new service during the policy period can change the risk. Businesses should therefore discuss significant changes rather than waiting until renewal to update the description of their trade.

A workforce can change throughout the year as businesses take on temporary staff, apprentices, seasonal workers or additional labour for larger contracts. These arrangements can affect the information used to place employers’ liability and other liability cover.

The insurer should be given an accurate picture of who works for the business, what they do and how they are engaged. Describing someone simply as self-employed does not necessarily explain the practical working arrangement or the exposure being insured.

Material changes in employee numbers, payroll or the type of work undertaken should be discussed during the policy period where required. Keeping the insurer informed helps the liability cover continue to reflect the way the business operates.

Liability insurance often depends on details that are easy to overlook when selecting cover from a short online form. Workforce arrangements, subcontracting, products, hazardous activities, work locations and contractual limits can all change what a business needs.

A broker can discuss these areas, present the risk to insurers and help compare the cover being offered rather than focusing only on the headline premium. This can be particularly valuable where the business has several activities or customers imposing insurance requirements.

At West Craven Insurance, the aim is to understand the business first and then consider a liability arrangement that reflects the exposures described and the cover available from insurers.