I was shopping around for Public Liability insurance and several companies asked me a lot more questions than before, some of them were quite sensitive. Why are they doing this?
In most instances they are likely to be trying to best assist you and supplying adequate cover for your needs (not always the same as what you ‘want’).
Although the Insurance Act 2015 does not come in to force until August 2016 many insurers and brokers have already tried to adopt the practices required to comply and have started to implement them early. This on the whole is very good news for people buying insurance since the Act largely benefits the consumers.
The Act puts more emphasis on Insurers and brokers especially to assess their customer’s needs and offer appropriate cover, NOT the cheapest. That said they should not be failing to provide the cheapest quote if it is suitable.
So what details do they need to take to do their job? Firstly, you have the standard insurance questions that are required for all policies such as; name and contact details as well as questions on criminal convictions, bankruptcies, county court judgments and claims. Please make sure these are disclosed, depending on the policy and how old the incidents were and what they were for will affect the insurers desirability to offer to cover so failure to disclose can void your cover. A typical example is that having a CCJ is unlikely to have a major effect on Liability insurance but is more likely to have an impact if it hasn’t been settled on a policy involving theft or damage cover.
With regards to Public Liability the most common question asked is “what is your turnover?” This helps to determine the size of your business and as such with an understanding of what you sell (and any other activities you undertake) a rough idea of your PL exposure. In most cases a retailer with a turnover of £1,000,000 has a great deal more exposure than another retailer that sells the same goods but only has a turnover of £50,000.
Normally with Public Liability you will also get Products Liability (if you are a retailer you shouldn’t have a policy without Products cover). The key information relating to this is also the turnover for the same reasons. Often they will ask if your stock is purchased within the EU and may sometimes refuse to insure you if it isn’t. This is because if one of your customers has a loss after something they bought off you potentially they will make a claim. If you have purchased the stock from a supplier in the EU the claim can potentially be subrogated back to your supplier. If you bought the stock from outside the EU the first point of contact in the EU for the goods is deemed liable with regards to any claim settlement. The insurer or you may still try and sue the original supplier as a separate matter.
If you have staff (even work experience or volunteers that are not family members) they will normally require the wage roll and the number of staff. This helps them estimate how much an employee is likely to be able to claim for lost earnings if they suffer an accident while working for you.
Finally, they may ask other questions relating to your business activities so they can better understand the cover they offer you is correct and meets your needs. Sometimes insurers and brokers will refuse to quote or assist if you do not take their recommendations or if you fail to insure correctly. They too are businesses and can face problems if they offer poor advice or incomplete insurance such as fines, poor customer relations or having to cancel policies due to lack of co-operation or providing adequate information.