Miscellaneous
Miscellaneous business is just that - business that doesn't fall into one of the standard ‘traditional’ professions. A miscellaneous risk is one that requires some thought by the underwriter. Some are very low risk and some much higher. For an underwriter to truly understand the class experience is the key requirement. There is a proliferation of new professions and some of these will become standard categories in due course. Some years ago risks in the Information Technology or Media industries might have been regarded as miscellaneous but not now, especially as it has been established that a standard miscellaneous wording is not suitable for those types of risks. Anyone who offers advice in return for a fee is a professional and needs PI and so anybody from an agronomist to a zoologist will fit into this category.
What do insurers look for?
Type of firm - If an insurer does not write a full spectrum of professions then he is unlikely to write a broad book of miscellaneous business as he will only feel comfortable with those miscellaneous risks which are close to his preferred areas. HCCI writes business across the board and consequently miscellaneous PI is the largest class we write.
Qualifications and experience – With standard professions, one expects standard qualifications. With miscellaneous business, the insured may not be qualified in the formal sense at all. So underwriters will look at a combination of qualifications and experience. An open mind is needed as often consultants will have no recognised qualifications.
Type of business - Every insurer has a different perception of the type of business that they want. A full description of the business activities carried out is important and should include any literature produced by the Insured as well as the address of any websites. Sometimes a detailed written description is helpful including examples of jobs done in the past, or, if it is a new business, of the type of work expected.
Risk factors – Underwriters will examine the risks faced by the consultant. Some, such as business consultants concerned with strategic issues or interior designers involved purely in the internal fit out of homes or offices can be considered low risk. Agricultural consultants advising on crop or dairy matters are further up the risk scale whilst those advising on environmental issue, perhaps the cleaning up of brown field sites or working with dangerous materials such as asbestos would be regarded as high risk. This is where the underwriter’s experience counts. At HCCI, we write over 300 different professions and there will be very little we have not seen before.
Claims – as with any PI risk underwriters will look at the claims record. This is an important factor in the assessment of risk. It usually reflects the type of work done and also the quality of the consultant and their staff, the internal risk management and experience.
Contract sizes - There is a direct relationship between the size and complexity of the job and the exposure.
Technology - Is the firm using 'cutting edge' technology or standard, tried and tested processes?
Overseas exposure - Does the practice carry out work for overseas clients? Careful consideration would be paid to such work carried out for US or Canadian clients.
Retroactive exposure - Does the practice have an exposure to claims arising from past work, whether in the current firm or a former practice?
Environmental exposure - Does the firm knowingly get involved in the environmental field?
Download
Miscellaneous brochure.
Examples of claims
Agricultural consultants - Incorrect advice regarding pesticides led to damaged crop. Claims are not uncommon. Some insurers worry about the pollution exposure.
Bailiffs - Seized and disposed of goods belonging to incorrect party. Firms with multiple claims are normally avoided.
Freight forwarders - Goods damaged in transit, allegedly due to insured's failure to take adequate precautions.
Interior designers – Client is unhappy as the colour scheme and furnishings are not as they expected. Client insists the insured begins the project again using a different colour and furnishings.
Safety consultants - Certification errors causing injury - e.g. lifts, industrial machinery, play equipment, fairground rides. Dangerous goods being carried improperly causing injury.
Trade association - Libel claim following ejection of member. Negligent advice to members of public regarding the trade's products or services.
Yacht surveyors and brokers – failure to spot a defect when surveying a vessel for a purchaser or mis-describing the output of a yacht’s engine. Marine surveyors are regarded as high risk whilst pure yacht brokers are seen as low risk.
What else you should look for?
Understand the risk - The most important thing is to understand the risk you are presenting to insurers as best you can. The better you understand the risk then the greater your ability to present it to underwriters. Try to pre-empt any questions the underwriters might ask by giving comprehensive information.
Clarity of proposal – There is only one miscellaneous proposal form and many hundreds of miscellaneous professions so it is not surprising that sometimes the form does not bring out the best and most accurate information about the risk. Rather than try and shoehorn the risk to fit the proposal obtain additional information. Often web site addresses will provide a lot of useful background information for the underwriter to consider. Speak to our underwriters beforehand, if you are unsure, to see how they would like the information presented.
Business description – this is important as it appears on the schedule in the policy and is the activities of the Insured which are covered. Always ensure that your client agrees the business description and that he is aware that any new activities need to be advised to underwriters.
Wordings
Miscellaneous wordings are by no means the same. The most basic, such as the LSW 116 or its successor the LSW 438, are Lloyd's market wordings that have been adopted or adapted by many companies, too. They offer very basic, no frills cover but need many extensions to bring them up-to-date.
HCCI offers comprehensive wordings with the majority of the usual extensions included automatically. We are always happy to provide specimen policies, or see our website (www.hccint.com/pi). We are also happy to tailor wordings where we feel we can, so do not hesitate to ask.
The usual cover
Most miscellaneous wordings offer an indemnity clause limited to claims (including claimants' costs) arising out of any negligent act, error or omission. Many have costs inclusive limits of indemnity that are eroded by the insurer's costs and expenses incurred in the investigation, defence or settlement of claims. Many also have costs inclusive excesses that apply to the insurer's costs and expenses incurred in the investigation, defence or settlement of claims even if there is no third party claim made. You should check if it's not clear. HCCI are able to offer both ‘aggregate’ and ‘any one claim’ limits of indemnity.
The usual exclusions
Typically, miscellaneous policies will exclude things that should have more specific insurance:
- Bodily injury / property damage, except where caused by a breach of professional duty
- Vehicles
- Products liability - but take care, as many miscellaneous businesses sell, repair and alter products but also have professional exposures. Be clear which policy operates where
- Contractual liability - this is liability assumed under any express warranty, agreement, guarantee unless such liability would have attached anyway. But take care with agreements such as collateral warranties (see construction professions)
- Insolvency / bankruptcy of insured
- Circumstances known at inception
- Fines and penalties
- Claims by financially associated parties - some insurers will cover these claims if they emanate from a third party
- Radioactive contamination and war
Then there are exclusions which HCCI can, if appropriate, add back into the cover.
- Fidelity
- Seepage and pollution and asbestos - watch out - many insurers maintain this exclusion even where there is a clear and insurable environmental exposure
The usual extensions
These are included as standard within the vast majority of HCCI wordings.
- Libel & slander
- Loss of documents
- Dishonesty of employees
- Unintentional breach of confidence
- Infringement of copyright
Special extensions / conditions - Some risks need cover for:
- Ombudsmen's awards
- Collateral warranties
- Housing Grants, Construction and Regeneration Act 1996 (in the UK where adjudication awards are likely, such as construction professionals)
