Reply to: insurance policy clause in contract

[TheFaQQer]

You could have a conversation with a team who understand contracting, look to deliver a great service to you and would be happy to discuss a fair and reasonable clause around insurance.

And then find that the job doesn't exist because they work for Hoaxley.

[Andy Hallett]

How the hell would Andy know what outages would cost the business. No disrespect to Andy but he is an agent.

Hmm, as part of my role I have supported implementations of SAP, Siebel and an EDW. Believe me, I can cut it with a fair few of you in understanding costs of things when they don't go to plan.

Most insurances have pre-set limits. Corporates and Public Sector organisations stipulate minimum levels of insurance. Why should agencies not do the same?

to be fair they tend to specify our level of liability which we always try and cap within insurable levels.

The wording, Andy, is 'inadequate'. Get real and put a figure on the insurance level you require.....then we all know where we stand!

Why would I be 'lucky' to secure an assignment with one of your brands? Is it something I said?

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£1m Professional Indemnity
£5m Public Liabilty
£10m Employers Liability

You'd be lucky if you got an assignment with us. You could have a conversation with a team who understand contracting, look to deliver a great service to you and would be happy to discuss a fair and reasonable clause around insurance.

[sigma]

Everyone will ask the same question.... Did you get the contract professionally reviewed?

Yes it was professionally reviewed.

[Wanderer]

No I didn't realise that a company could fold to avoid liability. Would that be when a law court has awarded damages which exceed the liability insurance cover the contracting company has, or as soon as the writ has been issued?

A company can cease trading at any time the director chooses to. Personally, I would fold my company at the first hint of any legal action since my company has no brand and no assets so there is no reason to take the risk of losing money.

Have a read about how Limited Companies work but basically, the liability of the company is limited to the value of the shares issued (hence, it is called "limited" company). In a typical contractor's LTD company there may be 1 or 2 shares issued with a value of typically £1 each. Alternatively some companies issue 100 shares at 1p each.

If your company has a lot of assets, a brand you have worked hard to build or cash retained in the company then you need to be a bit more careful.

I didn't make it clear, but the reason the job was turned down was because the contract smelt badly of IR35. I would have happily signed were it just the (incredibly small) risk of liability.

Everyone will ask the same question.... Did you get the contract professionally reviewed?

It surprised me that liability cover was written into a contract in a nonsensical way. I wondered if you could argue in court that because of how the clauses were worded it would be impossible to secure "sufficient" cover and therefore the claim was voided.

No.

You would be expected to give the care and consideration to the level of insurance cover required that a reasonable person would do. The PCG offer standard policies with £250,000, £500,000 or £1,000,000 worth of PI insurance. You should consider your circumstances and use your good judgement to decide which one you want. If you can stand up in court and explain the logic behind the decision and how you took professional advice from (say) PCG then I can't see that there would be a major problem.

Personally, I would lean towards the lower of the three unless the agency/client demanded otherwise.

Something to underline in red though: Don't EVER enter into a contract where you as director give a personal guarantee on ANYTHING. If you do this then you are personally underwriting your Limited Company with unlimited liability and this is not a good place to be. I have seen agents try and slip this in so watch it. Remember, the contract is between your company and the agent, not you personally. It is OK for you to be the named consultant, so long as it makes it clear that you may also send a substitute.

[sigma]

You do understand that it's your company that is entering into the contract and your company has limited liability, don't you? So if something went wrong and the company was sued then you would just cease trading and start a new company the next day. You don't stand to lose very much at all - think about it, why else would they offer cover for a multimillion pound risk for a few hundred pounds?

I wouldn't turn down a gig just because of that. I honestly don't see what the problem is here. Get a standard insurance policy with whatever amount you feel comfortable with and get on with running your business.

No I didn't realise that a company could fold to avoid liability. Would that be when a law court has awarded damages which exceed the liability insurance cover the contracting company has, or as soon as the writ has been issued?

I didn't make it clear, but the reason the job was turned down was because the contract smelt badly of IR35. I would have happily signed were it just the (incredibly small) risk of liability. Happy to take the work, slightly uneasy about signing contract with dumb-ass legalese.

It surprised me that liability cover was written into a contract in a nonsensical way. I wondered if you could argue in court that because of how the clauses were worded it would be impossible to secure "sufficient" cover and therefore the claim was voided.

[Wanderer]

I will be turning down the role - apart from the unlimited cover required it doesn't work from an IR35 perspective either. Shame, it sounded a good gig.

You do understand that it's your company that is entering into the contract and your company has limited liability, don't you? So if something went wrong and the company was sued then you would just cease trading and start a new company the next day. You don't stand to lose very much at all - think about it, why else would they offer cover for a multimillion pound risk for a few hundred pounds?

I wouldn't turn down a gig just because of that. I honestly don't see what the problem is here. Get a standard insurance policy with whatever amount you feel comfortable with and get on with running your business.

[northernladuk]

Most insurances have pre-set limits. Corporates and Public Sector organisations stipulate minimum levels of insurance. Why should agencies not do the same?

LOL. Really?

TF is your big brother it seems so I will let him explain.

[Taita]

How the hell would Andy know what outages would cost the business. No disrespect to Andy but he is an agent.

Most insurances have pre-set limits. Corporates and Public Sector organisations stipulate minimum levels of insurance. Why should agencies not do the same?

[TheFaQQer]

At which point you ensure you're covered, surely?

Possibly - I was merely pointing out why it's likely to be in there in the first place.

Already having the insurance in place indicates an expectation of being able to use a substitute who was an employee.

[TheCyclingProgrammer]

No, but you might need to take someone on as a substitute who isn't operating via their own limited company.

At which point you ensure you're covered, surely?

[TheFaQQer]

And are you an employer? Probably not.

"adequate employers’ liability insurance".

I had that taken out of my current contract (along with product insurance as I'm not a developer) because I'd hardly sue myself...

No, but you might need to take someone on as a substitute who isn't operating via their own limited company.

[northernladuk]

"professionally reviewed as the wording"

The wording, Andy, is 'inadequate'. Get real and put a figure on the insurance level you require.....then we all know where we stand!

Why would I be 'lucky' to secure an assignment with one of your brands? Is it something I said?

How the hell would Andy know what outages would cost the business. No disrespect to Andy but he is an agent.

[Taita]

We do audit that insurance is in place and I've not had an instance where the level of cover is lower than we need.

I review the contract suitability with our legal team every time there is a new piece of legislation. You will be delighted to know this has been annually over the past few years.

If you are lucky enough to secure an assignment with one of our brands I'd be more than happy to negotiate our archaic contract with you

"professionally reviewed as the wording"

The wording, Andy, is 'inadequate'. Get real and put a figure on the insurance level you require.....then we all know where we stand!

Why would I be 'lucky' to secure an assignment with one of your brands? Is it something I said?

[tractor]

...

And are you an employer? Probably not.

"adequate employers’ liability insurance".

I had that taken out of my current contract (along with product insurance as I'm not a developer) because I'd hardly sue myself...

At the point that this became optional, insurers began bundling it all together with PL and PI, presumably so they could continue charging for it whether you wanted it or not.

[andyc2000]

And are you an employer? Probably not.

"adequate employers’ liability insurance".

I had that taken out of my current contract (along with product insurance as I'm not a developer) because I'd hardly sue myself...