The sharing economy is an umbrella term that refers to short term renting or letting of assets, or provision of services by contractors, freelancers, or other self-employed workers. Most sharing economy activity takes place via peer-to-peer websites, such as letting rooms on Airbnb, or giving rides via Uber, though it also includes the gig economy and more traditional on-demand services. The name "sharing economy" comes about from the concept that when someone engages in this activity they are sharing their assets or skills with other people. The sharing economy is predicted to grow an enormous amount over the coming years, until it becomes such an integral part of our lives that it will become indistinct from the regular economy.
When people let their rooms or rent their assets, they are exposed to risk. The tenant or borrower may damage goods or property. There is also a risk that someone could injure themselves while in a rented room or using a borrowed item, in which case the owner could be at risk of being sued for medical expenses or damages. This risk is called liability. In addition, for self employed freelancers or contractors, there is a danger that a dissatisfied client will sue because they think that the work wasn't good enough. Insurance that protects against this is called professional indemnity, and it covers the cost of any legal bills that arise as a result.
The insurance premium is the cost of the insurance. It's what you pay at the start of the policy, or via installments, and it is shown to you as part of the insurance quote to help you to decide whether or not to buy the policy.
When you take out an insurance policy you agree to cover some of the cost of a claim yourself. The excess (also known as a deductible) is the amount of money that you will need to pay, while the insurance policy pays the rest. Quite often you can choose the excess level but you need to make sure that you will be able to afford the excess if you need to claim.
For example, say you have office contents insurance with an excess of £250, and some office equipment valued at £1,500 is damaged. If you make a successful claim, the insurance will pay out £1,250, since that is the value of the goods minus the excess amount.
There is no VAT charged on insurance premiums. Instead, there is a special tax called Insurance Premium Tax (IPT), which is currently 12% of the premium. Tapoly will always display the total amount you will pay including this tax. The IPT that you pay cannot be claimed back.
A "claims made" policy will pay those claims that occur while the policy is active and in force. Any claims made while the policy is active will be fully covered, as long as they are reported in a timely manner.
A "claims occurring" policy will pay claims that relate to events that occured while the policy was active. Any event that occurs while the policy is active will be fully covered, as long as the corresponding claim is reported in a timely manner.
If you need to make a claim or if you have received an email or letter from someone threatening to take legal action or make a claim against you please complete our online claim form, or call us on 020 7846 0108.
Visit our About Claims page for our short guide on what to do if you have received an email or letter or if someone has verbally threatened to take legal action against you.