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Why reassessing your risks is crucial as your business evolves

Posted on 21st October 2021 by Phil Ainley MCIM, CMktr, Dip DigM - Marketing Manager

electrical contractors insurance

New risks are emerging for contractors as they have been forced to adapt their businesses to the pressures of the last 18 months caused by the Coronavirus pandemic.

Richard Forrest Smith, CEO of ECIC, outlines what new risks contractors might be exposed to and the importance of having the right insurance cover in place.

 

The construction industry, specifically electrical contractors, have reacted well throughout the pandemic. Many construction sector contractors have been able to hold their own despite the challenges they’ve faced. During these difficult times they have responded to market fluctuations and pivoted to change the nature of the projects they have taken on.

Electrical contractors with a diverse customer base, combined with a mixed skill set, have proven to be best placed to react to changing customer demands and opportunities, whether it be residential, commercial or contracts of a specialist nature.

As an example, when the hospitality sector opened-up after lock-down it placed huge time and cost pressures on contractors. Yet the residential market on the other hand, has been buoyant in recent months as homeowners seek to improve their properties.

This ability to adapt has meant that electrical contracting businesses have remained robust by undertaking different types of contracts. However, current industry trends and emerging pressures can bring new risks that contractors need to be aware of and protected against.

 

Material shortages continue to cause issues

As the inability to source materials at reasonable prices continues with no immediate end in sight, we have seen instances where contractors have had to compromise and use unfamiliar or lesser-quality products.

With this in mind, it is important that contractors are trained sufficiently to fit new and unfamiliar equipment, or seek advice from the manufacturers. ECIC have received a number of claims where the incorrect fitting of equipment has led to property damage such as fires, as well as other serious incidents and injuries.

 

New trends will change risk exposures for contractors

The drive towards becoming carbon neutral is gathering pace. Many contractors are now regularly installing the latest low carbon and ‘smart’ installations and associated risks should be considered for these works.

A recent report by the charity, Electrical Safety First(1), highlighted the industry issues that need to be addressed in relation to the installation of smart products for the home. The report highlights the lack of specialised and certified installers, registered electricians in the low-carbon space, and the potential health and safety risks form insulation or technologies as we rush to meet set targets.

The same safety risks often apply to electric cars and EV chargers. With many new EV installers coming into the market, specialist training is vital for safety. In many instances, training should be demanded as part of any agreement with manufacturers.

As consumers and businesses strive to be more environmentally friendly and energy prices rise, renewable energy is fast becoming an appealing market. Again, training will be key as this sector also comes with its own risks, including working at height and in confined spaces. This is particularly relevant with an estimated 12,000 people a year needing additional training to meet the government’s ambitious green targets(2).

 

Regulations continue to evolve as new standards are established

The electrical installation sector is heavily regulated and this will only continue and evolve as new standards are established. For example, the new Electrical Safety Standards in the Private Sector (England) Regulations 2020(3) present opportunity as landlords update their property stock.

At the same time contractors will be aware that failure to meet their regulatory duties can result in penalties from regulatory bodies including the HSE. While insurance protection may assist with defence costs, any failures can still prove expensive and can cause reputational damage to the contractor, which in-turn can result in a reduction of opportunities and revenue.

 

Shortage of skilled labour continues to affect the construction industry

The shortage of skilled labour has hit the headlines in recent months as much as the shortage of materials. Many contractors have needed to increase the use of subcontractors and the temptation to employ insufficiently experienced staff could be difficult to resist.

Contractors must remember that they are responsible for the work that subcontractors undertake on their behalf and liabilities can arise should anything go wrong. Due diligence when selecting all subcontractors is therefore a must, which includes checking they are carrying adequate insurance cover to protect both the activity and scale of the project.

Due diligence on subcontractors should include, but is not limited to:

  • Details of warranties
  • Business insurance
  • Guarantees
  • Liens
  • Charges held by third parties
  • Past work examples and testimonials

The government has published a useful guide for conducting due diligence checks on subcontractors(4).

Electrical contractors face substantial daily risks, but awareness of what these are and how best to protect against them is a crucial step in safeguarding a business in today’s challenging circumstances. Due diligence, training, communication, and clear documentation are often the key to significantly reduce and manage these risks for the contractor.

Risks that electrical contractors face daily can include:

  • Liability – A mistake can cause serious harm to yourself, your co-workers, your customers, clients, and to the property you’re working in.
  • Personal accident – Working with electricity is dangerous and even a small error can be fatal. Repetitive strain injuries to hands, wrists, shoulders and back, can also be common due to working in awkward positions. Injury to yourself could mean loss of income if you are unable to work.
  • Theft – Your tools enable you to complete your job. Theft of tradesperson’s tools is common as opportunist thieves know that electrical contractor’s tool can be expensive and can be re-sold quickly on the black market.

It is important contractors discuss any business changes with their insurer or broker, who may be able to offer guidance and to ensure the contractor benefits from the most appropriate insurance protection available.

As a contractor, carrying insurance isn’t just about protection for yourself and your own business, it’s about providing your present and future customers and clients with peace of mind.

 

For contractor business insurance please contact 0333 321 1403 or click here to build a personalised online quotation in a matter of minutes.

 

Where can I find business help and advice?

The Markel Law Hub is an online resource containing a range of document templates and articles to help you manage your business successfully.

The Law Hub currently helps over 50,000 users and contains:

  • 800+ legal resources including contracts, policies, forms, and letter templates from Markel’s expert solicitors.
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  • 350+ links to key resources
  • Up-to-date information on new legislation and case-law.
  • Live Chat available Monday to Friday 09:00 – 17:00
  • Legal helpline.

If feel that you would benefit from access to the Law Hub, you can purchase an annual subscription at www.markellaw.co.uk/lawhub/.

 


Sources:

(1) https://www.electricalsafetyfirst.org.uk/media/q1iknvqz/electrical-safety-first-future-homes-report-september-2021.pdf

(2) https://electricalcontractingnews.com/news/industry-must-level-up-12000-people-a-year-to-meet-net-zero-targets/

(3) https://www.legislation.gov.uk/uksi/2020/312/contents/made

(4) https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1016120/Interim_Measures_Guidance_External.pdf#:~:text=Due%20diligence%20checks%20on%20subcontractors%2C%20as%20a%20minimum,not%20eligible%20to%20be%20appointed%20as%20a%20subcontractor.

 


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