Insurance Arrangements Overview
Partner organisations are expected to have appropriate insurance arrangements in place.
These will include:
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Employers Liability (EL) Insurance
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Public Liability Insurance
- Product Liability Insurance
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Professional Indemnity (PI) Insurance
Minimum recommended insurance coverage is indicated in the table below (these are based on LEAP requirements but different funders may have different requirements).
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Insurance Type |
Minimum recommended coverage |
Overview and Comments |
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Employers Liability Insurance
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£5m |
You must get Employers’ Liability (EL) insurance as soon as you become an employer - your policy must cover you for at least £5 million and come from an authorised insurer. EL insurance will help you pay compensation if an employee is injured or becomes ill because of the work they do for you. You can be fined £2,500 every day you are not properly insured. You can also be fined £1,000 if you do not display your EL certificate or refuse to make it available to inspectors when they ask. https://www.gov.uk/employers-liability-insurance
EL insurance usually covers the cost of compensation and any associated legal fees – check with your insurer to see exactly what your policy covers.
EL insurance is required to cover the activities of freelance workers and volunteers as well as employees Your policy should cover claims brought by:
Your policy should also cover claims brought by:
Check with your insurer to make sure your employers’ liability policy covers everyone who works with your business.
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Public Liability Insurance |
£2m |
Public liability insurance covers the cost of claims made by members of the public for incidents that occur in connection with your business activities. Public liability insurance covers the cost of compensation for:
Policies vary from insurer to insurer, but most public liability policies cover you for:
You should consider public liability insurance if:
Public liability insurance covers anyone, apart from employees, with whom you interact as part of your business operations such as:
Public liability insurance does not cover employees, temporary staff, students or people on work placements – for this you need employers’ liability insurance.
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Product Liability Insurance
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£2m |
Product liability insurance covers the cost of compensating anyone who is injured by a faulty product that your business designs, manufactures or supplies. You should consider product liability insurance if your business designs, manufactures or supplies a physical product that is sold or given away for free. Your business may be held legally responsible for any injuries to people or damage to property caused by a faulty product. You can be held liable for faulty products even if you did not manufacture them. You may be liable for compensation if:
Product liability insurance protects you against the cost of compensation for:
Product liability insurance may not cover you for:
If you do not manufacture the product but you distribute it, you should be covered if you can show that:
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Professional Indemnity Insurance
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£2m |
There is concern within the insurance industry regarding the level of cover required for retrofit work.
Professional indemnity insurance covers the cost of compensating clients for loss or damage resulting from negligent services or advice provided by a business or an individual.
If you offer your knowledge, skills or advice as part of your profession – either as a self-employed individual or for a company – you should consider taking out professional indemnity insurance. Some professions are required to have professional indemnity insurance by their professional bodies or regulators – these include:
Many other businesses choose to take out professional indemnity insurance to protect themselves against claims – these include:
Professional indemnity insurance protects you against claims for loss or damage made by clients or third parties as a result of the impact of negligent services you provided or negligent advice you offered.
Professional indemnity cover is usually offered on a claims-made basis. This means that your insurer will only cover you for claims that are brought against you during the term of your policy. If a claim is made against you after your policy has expired – even if the incident occurred while your policy was in place – you will not be covered for that claim. For example, if an incident occurred in 2011 when you had professional indemnity cover, but the client brings a claim against you in 2012 – after your policy has expired – your insurer will not cover you for that claim. If you cancel your professional indemnity insurance, for example if you are retiring or changing professions, you should consider purchasing a run-off policy. This covers you for any new claims that are brought against you after your professional indemnity insurance has expired. New claims can be brought against you for up to six years after an alleged negligent act occured, so your run-off policy should cover you for this period. If you are changing insurer, a run-off policy will protect you against new claims for incidents that occurred when you were with your previous insurer. Alternatively, your new insurer may agree to cover you for claims relating to prior incidents. Check if your new insurer covers you for claims relating to previous incidents, or ask about buying a run-off policy.
In relation to Retrofit work If you provide designs, specifications, advice or instructions as any part of your job you should invest in PI insurance. If any of your recommendations or advice have caused a financial or reputational loss for a client and you’re found to be at fault, this is insurance cover that will indemnify you against liability All companies that provide professional services, recommendations or advice should invest in PI insurance. PI will protect you if something you’ve done or recommended in the course of your work results in a financial loss for your client and they decide to take you to court. It can take a while for the issues caused by professional consultation/bad design to come to fruition Investing in PI will help to mitigate the consequences of any legal action which may arise, but bear in mind the points above in relation to a run-off policy.
How much professional indemnity insurance do you need? This depends on the type of business you run, the kind of work that you do, and the scale of the contracts that you work on. Professional indemnity can protect work you’ve done in the past, so the level of insurance you need will depend on how established your business is and how much of your previous work you want to protect (check this).
The DPPR Code of Conduct requires that each partner should hold Professional Indemnity Insurance that covers a minimum £100,000 including maintained cover for 6 years on a simple contract, and 12 years on a deed.
Naturesave has notified ECOE, TEC and others that the insurance industry is uncomfortable with the risk associated with providing retrofit advice. It has been agreed that we should work with Naturesave and a panel of insurers to discuss this; and help the insurance industry understand the work that we are undertaking, and the level of risk involved.
The Professionalising and Integrating Service Delivery Team (PIST) will be progressing this during the spring and summer 2024, and invite participation from Partner organisations as required. |
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