Liability insurance is increasingly not a regulatory but a business requirement: the client writes into the works contract that work may only start once cover is certified. If you are prepared for this, it is a routine question; if not, it becomes an obstacle to signing. This article looks at handling client requirements from two angles: how to comply, and what to watch for before you sign.
- The typical clause: a defined cover, a required limit, with a certificate – often as a condition for the contract to take effect.
- Meeting a client's requirement is typically quick if your contract is in order – the insurer issues the certificate.
- Watch the other direction too: extra liability you take on in the contract may fall outside your insurance cover.
What do clients typically ask for?
Three elements recur. The first is having cover in place: live liability insurance for the entire duration of the work. The second is content: a required limit range, sometimes a specific type of cover (public liability, professional indemnity, subcontractor extension) – on larger projects, with terms tailored to the project. The third is the certificate: a certificate of insurance issued by the insurer, typically at the time of contracting and occasionally refreshed (how the certificate works). For tenders, all this comes together into a formal set of requirements (tender article), and with a foreign client there are extra language and content requirements on top (foreign client expectations).
How to comply smartly?
The first move: read the client's clause word for word and compare it against your policy – limit, type of cover, extensions (contract checklist). If your policy falls short, there are two paths: increase or add to your existing contract, or a project-specific solution. An important timing tip: it is worth clarifying the insurance requirement before you submit your offer – the cost of compliance is part of your pricing, not a surprise afterwards.
The other direction: what are you taking on in the contract?
The liability clauses in client contracts sometimes ask for more than the law requires: extended liability, penalty clauses, commitments covering every kind of loss. This is where the trap lies: extra liability assumed in the contract typically falls outside your insurance cover (exclusions map) – meaning you may sign up to a commitment with no insurer standing behind it. The practical rule: look at the liability clause and the policy together, and if the two do not match, negotiate – either the clause or the cover.
The next step
If you have a client contract with an insurance clause in front of you right now, the fastest route is: send us the wording of the clause before a free consultation – in the meeting we will talk specifically about how to comply. For the other side of the chain – when you are the one asking subcontractors for a certificate – see the chain article and the checklist.
Example: the condition for taking effect
A mechanical contractor receives a subcontract for an office-building project. Under clause 14 of the contract, the site can only be handed over once valid liability insurance has been certified, at the stipulated limit – without it, the contract does not even take effect. The contractor's policy can only offer half of that limit. Two paths lie ahead: raise the limit on the existing contract (a turnaround of a few days), or negotiate the clause (an uncertain outcome). Since the offer has already been submitted, the cost of the increase eats into the contractor's own margin – had clause 14 been read before the offer was requested, it could have been priced in. The lesson: a client requirement is not an administrative footnote but a pricing item – reading the contract is part of the calculation.
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