Those who work in the contracting industry such as electrical, plumbers, IT or other cover a wide range of services and the majority of contractors will find themselves engaging in some level of activity that could leave them liable without realising it.

Contractors could find themselves liable, for example, if a product or service they have provided causes injury or property damage to a third party. Contractors know that they are required to have Public and Products Liability Insurance to make sure they are protected but efficacy cover is extremely important.

The best way to describe efficacy cover is that it is insurance against the legal liability for injury to third parties or damage to third party property due to a product or service failing to perform its intended function.

As well as efficacy cover, you may come across phrases such as inefficacy cover or failure to perform cover. This type of cover is absolutely essential for contractors who are carrying out performance-critical activity or things such as fitting fire & security systems or computer suites.

It is a common misunderstanding that cover needs to be in place in case the product such as a security alarm fails completely, however it is important to consider what comes into play should the product not perform as it was intended (such as an alarm not operating because it was not monitored; not because it was installed incorrectly).

A good example of this would be from a sprinkler installer, where a system was installed to the correct specification and all tested out, working perfectly. However, when a fire occurred, it does not suppress it as intended leading to increased damage.

In this example, many insurers would not cover this risk as this is not the intention of public/products liability cover. The deeper reasoning is that an inadequate product was supplied deliberately (although without intention).

As a specialist insurance broker, we are well placed to ensure you have the right level of cover in place and will always ensure that we understand the potential risks in order that we can advise you of the appropriate product that leaves you fully covered.

If you would like any advice about what type of insurance could be right for you then please do get in touch and we will be more than happy to assist!