Coronavirus: Liability Insurance FAQs
4 May 2020
E G Murray are to help and support you through the coronanvirus pandemic. Here we answer some of your queries on how liability insurance is affected by measures such as furloughing, mothballing, scaling back or diversifying in these challenging times.
We are furloughing some or all of our staff. Do we need employers liability?
Employees are still legally employed when furloughed. They retain all of their rights as an employee, they accrue holiday and they can carry out training and development for their role from home. They can not carry out any activities for the business other than training and development. The company employing these furloughed workers still has a legal obligation to purchase employers liability insurance. A gap in this compulsory cover could be very risky for any business.
Company operations have ceased. Can we cancel our public/products liability insurance?
If employees are furloughed and the business has temporarily ceased, it is wise to keep the public and products liability cover in place. If there are premises, warehouses or offices, then there is a public liability exposure there. If you are a contractor, there will be residual liabilities from work already carried out. If you have provided products, and plan to continue to do so again, the advice should be to keep the insurance in place.
How can I manage my cost of insurance?
For those with an element of a 'Manual' workforce, we recommend when policies come due for renewal that any furloughed 'Manual' employees are categorised as 'Clerical' for the relevant furlough period. Turnovers should be adjusted to reflect any period of inactivity or reduced productivity/sales. Depending on your specific circumstances and insurance policy, this can potentially provide a saving.
Some companies will be on a 'Declaration Linked' policy - typically, when you provide Estimates and Declarations for your wages and turnover at each renewal. Depending on your specific circumstances, you may obtain a return premium if the Estimates provided at the start of your insurance period are in excess of the Declarations provided at the end of the period. Please remember that any furloughed 'Manual' employees are categorised as 'Clerical' for their relevant furlough period in your wages Declarations, this will be relevant to upcoming renewals and next years.
We are diversifying to make money during the downturn, are we covered?
At E G Murray we can accommodate a vast array of businesses. We are used to catering for multiple business descriptions and tailoring covers as a business grows and develops. Please be sure to ask your Account Manager that any diversification in your business is covered.
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