How much insurance does an asbestos company need to have?
No one should be in any doubt about the extreme sensitivity and importance of an asbestos company’s work. Asbestos might no longer be in active use in the UK construction industry in which it was widespread prior to the complete ban on all forms of asbestos in late 1999, but it is still present in a broad range of properties around the UK.
Furthermore, such asbestos can still pose a very real risk to human health. This underlines the crucial role that qualified asbestos surveying, management, and removal professionals can play in helping to ensure asbestos-containing materials (ACMs) are safely and responsibly dealt with.
However, asbestos management companies can also face risks of their own, and we aren’t only referring to the dangers the substance itself presents. With compensation amounts for asbestos claims typically ranging from tens of thousands of pounds to a million pounds or more, there can be a high risk of an asbestos company having legal action taken against it in relation to its work.
You won’t want your own asbestos company’s entire future to be threatened as a result of a legal case being brought against you. So, it is understandable that you may be anxious to ensure you have adequate insurance in place for your business’s operations – a subject we will explore in greater detail below.
- 1 What are the minimum insurance requirements?
- 2 Professional indemnity insurance
- 3 The true cost of inadequate insurance
- 4 Factors affecting insurance costs
- 5 Strategies for managing insurance costs
- 6 The repercussions of low or no professional indemnity insurance
- 7 Conclusion: insurance plays a critical role in the asbestos industry
What are the minimum insurance requirements?
As an asbestos company, you will need to ensure you at least have the following types of cover in place:
- Public liability (PL) insurance, which protects your company in the event of a compensation claim being made against you, as a consequence of members of the public suffering an injury or their property being damaged due to your work. A PL policy will also cover any legal costs that you incur as a result.
- Employers’ liability (EL) insurance, which – in the event of one of your employees suffering a work-related injury or illness – will provide cover for compensation claims and any legal costs that may arise from such claims.
Professional indemnity insurance
This is another potentially crucial element of insurance for an asbestos company. A professional indemnity (PI) policy will cover your business for any claims that may be made against you in relation to advice you have given or work you have completed.
Of course, if you run an asbestos company, you will be anxious to conduct your company’s operations in a manner that keeps everyone safe and protected.
The fact of the matter, though, is that you can’t completely rule out the possibility of a civil or negligent act, error, or omission occurring over the course of your business. Or to put it another way: incidents and mistakes do happen, and if a legal case is brought against your organisation in relation to something like this, you will be thankful for having a policy in place that shields your company from what could otherwise be severe financial damage.
Typical levels of coverage for professional indemnity insurance range from £250,000 for low-end coverage, to as high as £1 million for medium coverage. A PI policy with £5 million of coverage would be regarded as high-end coverage, although for some asbestos companies, a policy with as much as £10 million of coverage may be justified.
There are various factors that might affect the level of professional indemnity coverage that your asbestos firm would be advised to invest in. These could include the breadth of asbestos services that your company provides, as well as whether your business takes on licensed (read: likely to be higher-risk) asbestos work, rather than merely non-licensed (generally lower-risk) work.
The true cost of inadequate insurance
Any failure to have the right insurance in place as an asbestos company – by which we mean, not only having the right level of coverage, but also the most suitable types of insurance – could bring about considerable risks for your business.
One classic problem that often arises for asbestos companies, is their present insurance not covering them for a particular activity, such as refurbishment or demolition surveys. So, if this is the case for your business, you might find yourself in a situation where legal action is taken against you, but there are certain exclusions or conditions in your present policy that leave your company exposed.
Even simply giving poor advice about asbestos management to a client, can put an inadequately insured asbestos company at risk. After all, it is well-known by now that an incident of asbestos disturbance can cause the release of asbestos fibres, which could subsequently be breathed in by someone nearby. As a consequence, any such exposed individual will be at higher risk of developing a potentially fatal asbestos-related disease in the future.
So, it could be possible for a client of your asbestos company to make a direct connection between advice that it received from you, and an occurrence of asbestos exposure that could have been avoided. Any subsequent legal case that is brought against you in relation to this could – if you are not adequately insured – threaten the very survival of your company.
Factors affecting insurance costs
When you approach a broker or insurer for the aforementioned types of insurance, you can expect to be asked questions about the below aspects of your company and what it does. These elements, in turn, will impact on your organisation’s likely insurance premiums.
- Your company’s number of employees. This should be an easy enough factor to understand – the greater the number of workers your company has, the greater the scope there might be for an incident to occur that would put your asbestos firm at legal risk.
- Your company’s industry experience. An asbestos company that has an excellent track record of providing legally compliant and safe services over an extended period of time, staffed by professionals who also have a high level of qualifications and experience, is likely to be perceived as less risky to an insurer than a firm for which these things are not the case.
- Your company’s claims history. Whether your company has had to make a lot of claims on its insurance in the past, or very few, will say a lot about the risk that it represents to any prospective new insurer. If your asbestos company carries out particularly high-risk work, this could affect its claims history, thereby also driving up the cost of any new policy. However, your company’s claims history is also likely to indicate much about the quality of its work, your level of experience, the capabilities of your staff, and the general standard of your company’s risk management practices.
- Your business’s risk management practices. As we stated above, your company’s ability to manage and navigate risk will feed into the frequency with which it needs to make claims on its insurance – and therefore, its probable insurance costs. This is an aspect of your company’s operations that you have the power to optimise, so that you can protect the health of others, achieve legal compliance, and help lower how much you need to pay for insurance.
Strategies for managing insurance costs
So, how can you help to minimise your asbestos company’s insurance premiums? The steps set out below are likely to be useful:
- Implementing effective risk mitigation and prevention strategies. We have addressed this topic above, but it is nonetheless one worth re-emphasising – even more so if your asbestos company is engaged with particularly high-risk work necessitating a licence from the UK Health and Safety Executive (HSE). Every aspect of how your company operates should comply with accepted best practice and relevant asbestos regulations, while minimising the scope for legal breaches to occur.
- Comparison shopping for insurance. Looking to a comparison website or broker that maintains relationships with many different insurers, rather than just one, could help to ensure you are guided to the most suitable policy for your company, of those available on the broader market. It could help to ensure you are not “sold” insurance that, for example, covers you for risks you do not face (such as licensed work if your company only undertakes lower-risk non-licensed work), with the implications this could have for your insurance costs.
- Tailoring coverage to your specific needs. Whether you do approach a broker or instead a company that would be providing insurance directly, you will want to be able to speak to them about whatever specialised needs your company may have. You will not, for instance, want to risk spending money on elements of coverage that your company does not need, especially if this could simultaneously leave you inadequately protected with regard to areas of coverage your organisation does
The repercussions of low or no professional indemnity insurance
Whatever decisions your asbestos company ultimately makes in relation to professional indemnity insurance, it is important to bear in mind that both your own business, and your clients, can face very real and serious risks if the most suitable insurance is not in place.
Your clients, for instance, are likely to include the owners and managers of non-domestic premises who are subject to relevant asbestos regulations, such as the Control of Asbestos Regulations 2012. This regulation sets out a “duty to manage” asbestos that is present on such clients’ sites.
So, a poor standard of asbestos services provided by your company to your clients could put them at risk of legal and financial liability issues, too.
The need to carry out corrective action in response to your company’s inadequate work or advice could also cause avoidable delays or disruptions to the client’s projects (for example, if they arranged an asbestos refurbishment or demolition survey from your company, prior to undertaking such refurbishment or demolition, only for previously unnoticed asbestos risks to become apparent later).
Then, there is the potential knock-on effect for the client’s reputation if breaches of asbestos law, or otherwise inadequate asbestos management, that arise from services or advice your company has provided, become publicly known.
These are all factors that could maximise the likelihood of a client of your company taking legal action against you for compensation. So, in practice, your asbestos company really can’t treat professional indemnity cover as a mere “optional extra” or “nice to have”.
Conclusion: insurance plays a critical role in the asbestos industry
We have put together this guide in the hope that, armed with knowledge of the above aspects, you will feel much more informed about the need that any asbestos company has for adequate insurance.
Having suitable, well-tailored, and comprehensive coverage in place will bring your asbestos company both short-term and long-term benefits, greatly supporting its efforts to survive, grow, and build a strong industry reputation.
If you are reading this as someone who is looking for accredited and reputable asbestos services, please don’t hesitate to enquire to Oracle Solutions’ experts, and to request a free and fast quote from us.
Written by Jess Scott
Jess Scott has been an all-round asbestos consultant since 1996. That’s nearly 3 decades of asbestos knowledge. He spends his time sharing that knowledge with the team at Oracle and with their clients. Jess's goal is, and always has been, to use my expertise in helping people to comply with the law. This legal compliance ultimately helps to protect everyone from the harmful effects of asbestos. Jess has acted as an asbestos expert witness in legal cases and is involved in many asbestos educational activities throughout the UK.