Electrical Contractors and efficacy insurance
Electrical Contractors know Public and Product Liability Insurance will protect them from any liability incurred by causing injury or property damage to a third party. So what is the role of efficacy insurance?
Efficacy insurance comes in many guises: efficacy cover; inefficacy cover; and failure to perform insurance. Whatever the name, essentially, they all describe the same cover: it is insurance against the legal liability for injuries to third parties or damage to a third-party property arising from a product or service failing to perform its intended function. This makes it vital for contractors undertaking critical activities, such as fitting fire and security systems, control panels and computer suites.
Efficacy insurance provides firms with an additional layer of protection should a product “fail to perform.” Think about it for a moment. It’s easily done. An alarm may not have been fitted to the correct specification. It may even have activated and simply gone unmonitored. Whatever the issue, the small additional cost of having efficacy insurance could get your firm out of a potentially disastrous hole the one time it matters – when you are involved in a claim.
Most insurers exclude efficacy for the Fire, Security, and Electrical Sectors because underwriters deem them high risk. This makes it essential you seek out professional advice to ensure any cover you buy is “fit for purpose.”
Efficacy insurance levels of indemnity vary across providers, but are generally £ 1M, £2M, £5M or £10M, dependant on the activities being undertaken and the clients involved.
It is important to keep efficacy cover in mind when engaging any bone fide subcontractors as you need to ensure they have their own valid cover and that it is equivalent to your own or at least meets your own insurers criteria.
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