INSURANCE WHEN TENDERING
Contractors insurance when tendering – what you need to know!
Insurance is a big thing, required in many aspects of your life.
Home Insurance. Car Insurance. Mortgage Protection. The list goes on.
Business Insurance is, of course, a part of this list and if you are a business owner, you’ll know some of the complexities attached with Insurance – unless you are an Insurance Business Owner, we take it this will be quite easy for you guys to grasp.
When tendering, information regarding your contractors insurance is heavily sought as part of the pre-qualification questionnaire (PQQ) process, ensuring you have the basic levels of insurance to deliver the contract at hand.
The types of insurance you require are usually defined as:
- Employer’s (Compulsory) Liability Insurance – this is the insurance which will enable you to meet the cost of compensation for your employees’ injuries or illness whether they are caused on or off-site. You automatically need £5M minimum here.
- Public Liability Insurance – this is the insurance that protects you if a member of the public sues your business.
- Professional Indemnity Insurance – this insurance covers legal costs/expenses if you are alleged to have provided inadequate advice, services or designs that cause your client to lose money.
- Product Liability Insurance – this insurance protects you against claims of personal injury or property damage caused by products sold or supplied through your business.
As per a typical pre-qualification questionnaire (PQQ) or invitation to tender (ITT), buyers are encouraged with the following, as per Public Contract Regulations:
“You should allow potential suppliers to self-certify that they have, or will have in place, any required insurance in the event that they are awarded the contract. It is not appropriate at this point to insist on evidence that cover already exists. You should specify the level of cover required on a case by case basis. This should be proportionate and reflective of the nature of the work and the risk involved. Any reason for requiring insurance above that required by law should be justifiable.”
Insurance is one of the key things that you can either pass or fail on as part of the exclusion grounds within a PQQ. This assesses you economically and financially, which assures you have the necessary financial means to commit to the contract specification.
It is normally laid out as follows:
Even if you don’t have the correct insurance currently, the buyer tends to ask if you or your organisation is in a position to easily obtain this prior to the commencement of the contract through self-certification (as above). The buyer will usually allow suppliers to ‘commit to obtaining this’, as many suppliers may not have the exact level of insurances needed.
However, in specific industry sectors, suppliers may already need the insurance before applying, with evidence needed. For example, a lot of tenders/PQQs in Technology & Digital tenders, we’ve noticed that suppliers need to attach copies of their insurance policies in order to make it to the next stage.
You’ll find your market-sector wields specific levels of insurance which is heavily recommended for you to maintain and some buyers may require proof of this initially. Make sure you understand the recommended amounts of contractors insurance you need to operate competitively in your market sector, so this doesn’t pose an issue when tendering for works.
A lot of suppliers will undoubtedly give this section minimal thought and just tick YES to whatever insurance is being requested. Remember to read this – you may find insurance may be way too excessive – which could possibly pose further clarification questions to why.
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