How to check a supplier’s insurance certificates

Most supplier onboarding asks for “evidence of insurance”, and most suppliers send a PDF. Whether that PDF protects you depends on details that are easy to skip: whose name is on it, what activities it covers, and whether it is still in force.

This guide covers the three policies buyers most often ask for, what UK law requires, and how to check a certificate in a few minutes.

The short version

1. Know what your contract requires. The type of cover, the minimum limit and any conditions, such as cover for your organisation as principal.
2. Ask for the certificate or schedule for each policy, not a broker’s summary.
3. Check six details: the insured name, the policy period, the limit, the activities covered, the insurer and any conditions.
4. Check the insurer on the Financial Conduct Authority register.
5. Record the renewal date and ask for the new certificate before it falls due.

The three policies

Manufacturers and distributors often hold products liability cover, for claims caused by products they make or supply. It is frequently combined with public liability on one policy.

What the law requires for employers’ liability

Under the Employers’ Liability (Compulsory Insurance) Act 1969, most employers in England, Scotland and Wales must hold employers’ liability insurance:

• At least £5 million of cover. In practice most insurers offer at least £10 million.
• From an authorised insurer. A policy from an unauthorised insurer may not satisfy the law.
• With the certificate displayed where employees can easily read it. Since 1 October 2008 it can be displayed electronically, as long as employees know where to find it.

The certificate must state the minimum level of cover and the companies covered by the policy. An employer can be fined £2,500 for every day it is not properly insured, and £1,000 for not displaying the certificate.

There are narrow exemptions, including family businesses that are not incorporated, and companies whose only employee is the owner holding 50% or more of the shares. A supplier with employees who says it does not need employers’ liability insurance should explain which exemption it relies on.

Six details to check on every certificate

1. The insured name. It should be the legal entity you contract with. Check it against the company name and number on Companies House. A certificate in the name of a parent company, a sister company or a director personally does not cover the entity on your contract unless the policy names it.

2. The policy period. The certificate must be in force on the date you check it and should run past the start of your work. Note the expiry date.

3. The limit of indemnity. The amount must meet your contract. Check whether it applies to each claim or in the aggregate for the year, since an aggregate limit can be used up by other claims.

4. The activities covered. Policies describe the business they insure. A supplier insured as a “joinery manufacturer” that installs on your site, or works at height, may be outside that description. Ask when the work you are buying is not obviously within it.

5. The insurer. The certificate should name the insurer, not only the broker. Check the insurer on the FCA register by name or firm reference number, and check that the contact details match the register rather than the certificate, since fraudsters copy genuine firms’ names.

6. Conditions your contract relies on. If your contract requires an indemnity to principal clause, a waiver of subrogation or a specific territorial scope, look for it in the schedule or ask the broker to confirm it in writing.

Professional indemnity is different

Professional indemnity policies are usually written on a claims made basis: the policy in force when the claim is made responds, not the one in force when the work was done. Two consequences follow. A supplier should keep PI cover in place for a period after your work ends, often set in the contract, and a gap in cover can leave earlier work uninsured. Ask about both if PI matters to the contract.

Red flags

• The certificate is in a different name from the contracting entity.
• It expired, or expires before the work starts.
• The limit is below your contract, or is an aggregate already reduced by claims.
• The insurer cannot be found on the FCA register, or its contact details differ from the register.
• A broker’s letter says cover is “in place” without naming the insurer, the policy number or the limit.
• The business description does not include the work you are buying.

Keeping it current

Insurance renews every year, usually on a different date for each policy. Record each expiry date in your supplier record, ask for the renewed certificate a few weeks before it falls due, and treat a missing renewal as a gap until the new certificate arrives. The same discipline applies to the other evidence in a supplier file, as covered in how to review supplier compliance evidence.

Where DataStruct fits

DataStruct reads a supplier file against your requirements. For an insurance requirement, it finds the certificate passages that support it, links each one to the file and page it came from, shows the insured name, limit and dates those passages state, and says so when no certificate on file supports the requirement.

It does not check the FCA register or contact brokers, and it does not decide whether the cover is adequate. Those checks, and the decision, stay with your reviewer.