April 4th 2015

Insurance FAQs

We’re frequently asked questions by our clients about insurance matters and answer some of the regular queries we receive in the list below.

If you’ve got a question on an insurance related matter that you’d like to see added to this list, please email us at info@hine.co.uk and we’ll endeavour to answer and update the blog post.

1. What’s IPT and why do I have to pay it on my insurance?

IPT stands for Insurance Premium Tax – introduced by the government in 1994. As a tax, it is a legal requirement on all insurance policies, unless they are specifically exempt (such as life insurance or some commercial insurances). The current rate of IPT is 6% (as at April 2015). 

2. Why don’t insurers issue public liability certificates?

Because public liability is, in most cases, not compulsory, insurers do not generally issue certificates of insurance with the policy documents. Insurance certificates are normally only issued for compulsory classes of insurance such as employers’ liability and motor insurance.

3. As a contractor, why am I asked about professional indemnity insurance on my contract questionnaires?

Some contractors will provide an advisory service or another professional service (e.g. design/planning) in addition to any manual work they carry out. They could be challenged on this element if an error occurred and professional indemnity insurance would cover this.

4. Do I insure stock on the basis of cost to me or the retail price?

You should insure stock at the cost price to you.

5. What’s the difference between the declared value and the sum insured?

The declared value is the cost of rebuilding premises (or replacing contents) on the first day of each insurance period. The sum insured will include a percentage uplift designed to cover inflation during the insurance year (and during the subsequent period required for designing, planning, tendering and actual reconstruction, however long that might take).

6. What’s the difference between reinstatement and indemnity?

Reinstatement cover means that the insurers will pay the cost of replacement with a new item which is equal to but not better than the item lost or damaged. Indemnity means that the insurance will only pay for the market (second-hand) value of the item.