UK businesses are being warned to prepare for liability insurance prices to increase by 10-15% as another liability provider has announced its departure from the insurance market which is likely to create a “ripple effect”.

Unfortunately this could be the tip of the iceberg as many insurers are losing their appetite for some business lines, with availability restricted for certain types of businesses, in particular those who operate in high risk liability sectors such as waste removal, roofing and scaffolding.

When looking at a contractor’s business insurance there are a number of factors that can affect the terms provided.

Activities Undertaken
Activities and sectors will have their own rating of risk, and insurers will be interested in the types of projects and in which the contractor is involved in.

Each trade has its own rating based on historic claims data for the Industries. For instance, a building contractor, air-conditioning engineer or plumber working on individual dwellings, offices or shops can be considered very low risk, compared to a mechanical engineer working in a water control room for manufacturing plant. The ratings for each trade and type of client are different due to the level of risk and the size of a potential claim that can occur.

Turnover
The turnover is an important rating factor when an underwriter is considering an insurance premium, as this is the one element that all companies can be judged on.

Project sizes
The size and complexity of contracts is also taken into consideration. Small office projects can be considered lower risk, as opposed to being the lead contractors for a high rise London projects, where the total losses could potentially be in the millions should a claim arise.

Number of years trading and experience
Newly established businesses can be seen as a higher risk to insurers, as there is a lack of trading history to confirm a good claims experience and ability within the industry. When presenting a risk to an insurer, it can be beneficial to provide a copy of the directors’ CV’s, as this can present a better picture of the business or person being insured.

Overseas projects
Does the contractor carry out any work overseas? Specialist Contractors often find that their services are required all around the world, especially in developing countries where there can be a skills shortage.

If your liability insurance has increased at renewal and you would like us to conduct a market review please call to speak to one of our advisers.