When ‘fully insured’ means anything but

‘Fully insured’ – we see the phrase everywhere. We see it written on business’s vehicles, business cards, websites, letterheads and so on. Any type of marketing material you can imagine, you will at some stage see someone purporting to be ‘fully insured’.

I recently hired a bouncy castle for my son’s birthday, and it stated on the owner’s website that he has “full liability insurance”.

I was intrigued by this, as I knew he was insured with Sportscover via our company, and I’m pretty sure we don’t sell any “fully insured” products.

It’s a phrase people like to bandy about, particularly in the leisure industry. It makes them look diligent, professional and considerate vis-a-vis their customers’ needs. It says: ‘Yeah, don’t you worry about anything – I’m fully insured.’

But how does Joe Bloggs, who hires the bouncy castle, interpret this? Incorrectly, that’s how.

He thinks:

1. Every eventuality I can imagine is covered.

2. Mr Bouncy Castle Owner is insured, so I don’t need to arrange any cover myself.

3. If someone is injured as a result of my negligence and a claim is made against me, Mr Bouncy Castle Owner’s insurers will ‘sort it out’.

4. Every claim is dealt with and paid – in other words: there is never a breach of a policy condition; there are no exclusions; and non-disclosure and misrepresentation do not exist. In fact, I don’t know why insurers sometimes get bad press. They pay every claim.

Of course we know this is incorrect, but Joe Bloggs doesn’t. Is this a problem? I think so.

It costs insurers in the form of lost income from day-hire insurance. It also costs Joe Bloggs when he finds out he’s actually negligent and not covered by the bouncy castle owners’ policy, so has to sell assets in order to pay damages. And it costs the claimant because Joe Bloggs doesn’t have any capital. In fact, the only person it is very unlikely to cost is the “fully insured” bouncy castle owner.

There is also a case to suggest that advertising the fact that you are fully insured only encourages claims. A soft play centre with a sign on the wall stating that it is fully insured might encourage the parent of a clumsy child to submit a public liability claim, when ordinarily they might not even considering claiming.

So what should we do about this? Well, for a start: educate our customers. They need to be discouraged from using this improvident phrase. They need to understand that it is misleading and that it has the potential to incur great expense to some unwitting client of theirs.

It may seem as though I’m being rather dramatic, but I firmly believe that ‘fully insured’ is a phrase we need to make a concerted effort to eradicate. It serves no purpose except to mislead! IT

Leigh Kendall is chief executive of Leisureinsure