Contractor’s insurance when tendering – what you need to know!

Insurance is a big thing. This is 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.

When tendering, information regarding your 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.

You can find out more about the basics of a PQQ by clicking here.

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 productssold 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 your economic and financial, which assures you have the necessary financial means to commit to the contract specification.

You can find out more about Economic & Financial Standing by CLICKING HERE

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 contractor’s insurance before applying, with the evidence needed. For example, in a lot of tenders/PQQs in the Technology & Digital sector, 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 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.

For further information or if you have any questions regarding contractor’s Insurance when tendering, join the discussion on our LinkedIn forum by CLICKING HERE.

Or if you want to find relevant opportunities for your business, see our industry-specific tendering platforms by CLICKING HERE.

We’re here to help you understand and succeed.