When it comes to insurance, some risks are more obvious than others.

In 2016-17, the HSE prosecuted 206 cases from the construction sector—by far the highest number of any sector. The HSE had a 93 per cent conviction rate and those prosecutions led to £15.9 million in penalties or an average fine of £77,000 per conviction, an increase of more than 100 per cent over the previous year1.

To avoid these hefty fines, it’s worth asking yourself the following five questions:

  • How robust are your risk assessment, management and training procedures?

    It’s important to carry out and record a risk assessment for your workplace – you need to think about what could cause harm, and what precautions you will take to prevent it. Write down how you manage Health and Safety in your business in the form of a Health and Safety Policy (this is compulsory if you employ 5 or more people).

    You will also need to give your employees access to competent advice so that they can meet their responsibilities. This could be someone within your business who has received training, or an external consultant.

  • What are your procedures for working with subcontractors?

    When discussing sub-contractors there can be a lot of confusion around whose responsibility the insurance is and what your liability insurance should cover.

    Whilst it is clear that the employer is responsible for the sub-contractors health and safety; it can be unclear who the employer actually is.

    There are two types of sub-contractors;

    1. Labour only sub-contractors (LOSC), who are classed as employees and as such, need to be included under your employers’ liability insurance;
    2. Bona fide sub-contractors (BFSCs), who are not classed as employees and do not need to be included under your employers’ liability insurance however you must make sure that all BFSCs working with you have their own insurance. You should also ensure their limits of indemnity match with the main contractor’s policy.
      Whilst it can sound confusing, many public liability policies carry a Bona Fide Contractors warranty, which obligates you, the contractor, to ensure all BFSCs working with you have their own insurance.
      In short: as long as you retain a copy of their insurance and ensure it is up to date, your policy can provide contingency cover in situations where their insurance maybe cancelled or fails to respond, (for example, for non-payment). As well as checking the dates, policy terms and limits you should pay careful attention to the business description.
  • How effective is your record-keeping system?

    By law, there are some work related accidents and diseases that you must report if they occur. Further details of these can be found on the HSE website at www.hse.gov.uk

  • What procedure do you have in place to address an incident?

    When a business can’t trade for a period of time, many of the usual expenses still need to be paid, from wages, to rates and rent. Business Interruption Insurance provides financial support in the event of a natural disaster, both to repair the physical disruption, and to replace any financial losses, such as profits and staff salaries. Essentially it’s designed to put your business in the same financial position as it was prior to the disaster.

  • What impact would an incident have on your company’s reputation?

    Just like trust, a business’s reputation can take years to build and seconds to break. Where once an incident would be shared by word of mouth or traditional media now stories can be shared as they happen via social media. Depending on the nature of the incident this could lead to a loss of customers and therefore revenue. It therefore makes sense to ensure you have an incident response plan in place so you know how to respond in a crisis.

If you would like a free review of your insurance to make sure you are covered contact one of our NAPIT Insurance advisors on 03455 646173 or fill out our contact form.

1 2018 Zywave Construction Insurance Profile Second Quarter 2018