Firms warned to beware ‘useless’ insurance products

Construction firms should beware of payroll providers offering useless insurance products.

Hudson Contract is issuing the warning after being contacted by a victim of mis-selling. A subcontractor who suffered a back injury on a building site was told he wasn’t eligible for payout despite his client paying for personal accident insurance as part of a CIS contracting service.

Companies must be registered with the Financial Conduct Authority (FCA) to advise on, arrange or sell general insurance products, even if it is only a small part of their business.

Ian Anfield, managing director of Hudson Contract, said: “We are concerned that the mis-selling of insurance products is widespread by unauthorised and unscrupulous payroll providers, often posing as commercial contractors. Many firms believe these policies reduce their premiums but they are actually designed to work against them.

“Policies sold as ‘insurance for the subbies’ are actually policies designed to protect the intermediary. In the vast majority of cases, when a claim is made, the policy provider simply refuses to pay out or counter claims against the construction firm the subbie was doing the work for. Something that was sold as a benefit ends up being a huge problem.

“Some payroll providers are offering useless insurance products as a ‘value-add’ to potential customers before transacting and then hiking up their fees. For the avoidance of doubt, Hudson Contract does not offer insurance products – and our payroll fees have remained at the same level since 1996.”

Mr Anfield added: “If you are offered insurance as part of a payroll package, make sure it is supplied by an FCA-registered company, and that policy documents are issued to every operative or supposed beneficiary of that policy. Importantly, you must understand exactly what the policy covers, who claimants must go to in order to make a claim, and what happens when a claim is made. The last thing you want to do is end up as piggy in the middle for lots of claims, or be on the wrong end of a time consuming and costly counter claim.”

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