An introduction to Insurance Backed Guarantees: A small price to pay for peace of mind
Posted by: electime 11th April 2023
by Samuel Girven – Qualitymark Protection
Insurance Backed Guarantees (IBG) have grown in popularity since their introduction as a mandatory requirement for government-funded schemes and TrustMark Registered Businesses. Despite this, there is still confusion about what protection they provide and how they work.
In essence, an insurance backed guarantee is a cease-to-trade insurance policy that an installer takes out on behalf of the homeowner. This policy serves as a backup and underpins the installer’s own workmanship guarantee, in the event that the installer goes out of business and is unable to honour their written guarantee to the customer.
In the current economic climate, even the most successful businesses have been hit hard by the lasting impressions of covid and the cost of living crisis. Unfortunately, the financial circumstances of a business can change quickly. As such, some customers now expect an insurance backed guarantee as a standard part of their installation contract, before they consider signing on the dotted line.
We even hear cases where a customer withholds payments until an IBG is provided. Although this is an extreme circumstance, these installers often start to provide financial protection on the back of all their installs, to stop any delayed payments in the future.
Despite this, an insurance backed guarantee is more than just financial protection. It can also be utilised as a fantastic marketing and sales tool, helping to convert more quotations and ultimately helping to win more business. In a highly competitive market, offering an IBG can help installers stand out from the crowd giving them an edge over competitors. Put it this way, if you were having work completed at home and were provided two very similar quotations, one with an IBG and one without, who would you choose?
Now, that all sounds great, but how much does an insurance backed guarantee cost? Thankfully, it isn’t going to cost a small fortune. For example, a 2-year electrical installation insurance backed guarantee from Qualitymark Protection would only set you back £16.80 plus a £2.10 registration fee. A small price to pay for the peace of mind it provides both you and your customers, not to mention the fact that it could result in converting more quotes.
There are a few IBG providers on the market, and all provide different levels of coverage, so it’s important that you do your due diligence and find the one that’s right for you. Just make sure you have a read into the small print, as some providers charge onboarding and monthly fees to use their service, and not all carry the additional protection provided by the FSCS (Financial Services Compensation Scheme).
