In the dynamic world of business operations, electrical systems are the lifeblood that keeps the wheels turning. However, the integrity and safety of these systems are not only critical for day-to-day operations but also for maintaining business insurance warranties. In the UK, electrical testing is not just a regulatory requirement; it’s a linchpin in ensuring your business insurance remains robust. In this blog and video (here), we explore the significance of electrical testing in the context of business insurance warranties.
In this blog, we will look at the two most significant types of electrical testing
- Fixed wire testing, also known as a Periodic Inspection or Electrical Installation Condition Report (EICR), involves testing a building’s electrical safety to meet health and safety regulations
- PAT (Portable Appliance Testing). This is not to be confused with Fixed Wire Testing.
PAT Testing is where your electrical appliances and equipment is maintained, as opposed to your electrical installation.
Fixed Wire Electrical Testing:
Legal Compliance: It’s not a legal requirement itself but if you don’t do it, you’re not maintaining your electrical installation and are therefore not legally compliant by being in breach of the following regulations
- Electricity at Work Regulations 1989
- Health and Safety at Work ACT 1974
- Workplace (Health, Safety & Welfare) Regulation 1992
Regular electrical testing helps you comply with your responsibility to ensure the safety of employees and visitors.
Repercussions of non-compliance: Non-compliance with the HSE Act range from small fines to imprisonment, depending on the severity of the incident and the harm inflicted. Breaches of the Electricity at Work regulations (1989) typically result in fines. Insurers will likely use non-compliance to repudiate a claim.
Preventing Electrical Failures: Electrical failures can have catastrophic consequences, from disruptions in operations to fire hazards. Regular testing identifies potential issues before they escalate, preventing costly downtime and damage.
Protecting Human Capital: Beyond equipment and property, the safety of personnel is paramount. Electrical testing safeguards against the risk of electric shock, ensuring a secure working environment.
Electrical Testing and Business Insurance:
- Insurance Policy Conditions: Many business insurance policies, especially property and liability coverage, may include conditions related to electrical safety. Failure to adhere to these conditions could jeopardize coverage.
- Risk Assessment: Insurers assess the risk associated with a business before providing coverage. A comprehensive electrical testing regimen can lower the perceived risk, potentially reducing insurance premiums.
- Mitigating Fire Risks: Electrical failures are a significant contributor to fire incidents. By regularly testing and maintaining electrical systems, businesses demonstrate a commitment to risk reduction, which insurers view favourably.
Tips for Businesses:
- Regular Testing Schedule: Establish a routine electrical testing schedule in line with regulatory requirements. This not only ensures compliance but also demonstrates diligence in maintaining a safe working environment.
- Documentation Matters: Maintain thorough records of all electrical tests conducted. In the event of an insurance claim, having comprehensive documentation can be crucial in proving compliance with policy conditions.
- Immediate Rectification: If any issues are identified during testing, address them promptly. This proactive approach not only enhances safety but also showcases a commitment to risk management.
- Transparent Communication: If there are changes in electrical systems or if challenges are anticipated in meeting testing requirements, communicate these to your insurer. Transparency fosters a cooperative relationship.
Things to remember:
- The person certifying the premises must be competent and accredited. If you employ your own electrician on the payroll, your standard policy warranty will need amendment.
- Many suppliers offer a 20% survey as this is allowed for in the Regulations. This is only satisfactory if the whole installation is current and revisited within the prescribed period. We recommend a rolling programme if you have multiple sites or buildings to avoid disruption.
- The certification process is a requirement for both landlord and tenant. Typically, a landlord pays for the certificate when first letting out the premises and the tenant thereafter as part of the maintenance of the property.
- The periods are absolute, and any recertification should take place inside the period not in addition.
- Keep the certificate digitally or off site should the worse occur.
We can arrange a 30-day extension for you to have the inspection carried out.
The contractor trap:
Electrical contractors can see this as a significant revenue generator. If your certificate has expired, be prepared to undertake the remedial work alongside the certification. We have regular issues with electrical tests being undertaken, an “Unsatisfactory” certificate produced with a list of corrective items – resulting in a quote for the work and time spent to return and finish each issue. If these issues are simple like a broken socket, it is far more economical to do the work as you go. Insurers are also expecting work to be completed in tight timescales.
All priority 1 and 2 recommendations need to be completed within 30 days of the inspection being completed. We have seen electricians take 30 days to do the certificate alone! We may be able to obtain a short extension following the assessment depending on the scope of works required.
PAT Testing
Most clients arrange Portable Appliance Testing (PAT testing). Insurers carry a similar warranty for PAT Testing. A claim payment for fire from a portable device may also be dependent on being able to evidence in date PAT testing.
It is not a legal requirement to do PAT Testing. The law simply requires an employer to ensure that their electrical equipment is maintained in order to prevent danger. It does not say how this should be done or how often. Employers should take a risk-based approach, considering the type of equipment and what it is being used for. This should take into account how much wear and tear the item suffers. For a monitor in an office, a 3 year period is fine. For an extension cable in a builder’s van, 3 months could be more appropriate.
The person doing testing work needs to be competent to do it. In many low-risk environments, a competent member of staff can undertake visual inspections if they have enough knowledge and training. However, when undertaking combined inspection and testing, a greater level of knowledge and experience is needed, and the person will need:
- the right equipment to do the tests
- the ability to use this test equipment properly
- the ability to properly understand the test results
Conclusion:
Electrical testing isn’t just a checkbox on a regulatory form; it’s a powerful tool in fortifying the resilience of your business. By diligently conducting and documenting electrical tests, you not only meet your legal obligations but also ensure compliance with any Conditions and Warranties on your policy.
About Us
Founded in 1987, Castlemead Insurance Brokers is an independent commercial insurance broker, specializing in Corporate Insurance, offering a full insurance broking and risk management service to our clients. Offices in the South-West of England, with clients across the UK, including Scotland and Channel Islands. Castlemead are experts in International Insurance Programmes and are partner members of the GBN Insurance network. We also have an EU subsidiary to aid placing insurance policies with modest EU Insurance risk
