Business liability advice: Which activities belong in the business description?

An accurate description of business activities makes your liability proposal easier to understand: customers recognise their business, and you can ask the insurer about the work actually performed. Precision is particularly useful for businesses combining several activities. Selling goods, installing them and occasionally repairing them involve different tasks. An industry label is convenient, but does not yet identify the scope to submit for underwriting.

Start with the work the customer actually undertakes

First ask what the business owes its client in practical terms. “We provide building services” leaves much open. “We clean rooms, carry out minor repairs and subcontract electrical work” gives you three starting points. Ask the customer to describe a typical job from quotation to completion. Listen for when employees do the work, when other people’s property is taken over and which services another company performs.

Then deliberately examine a less frequent job. The main activity is usually easy to explain; additional services reveal useful differences. Does the business merely sell a spare part or install it too? Does it only inspect equipment or alter it? Does it arrange somebody else’s contract or undertake the entire package itself? These questions change the business description and therefore the subject of your enquiry to the insurer.

An activity’s share of revenue helps establish its commercial significance. It does not describe its possible consequences. An occasional job may create a different loss scenario from everyday work. Record frequency and nature separately: how often is it performed, what is worked on, and which third parties or property could be affected? A small percentage calls for proper assessment, rather than leaving the activity out.

Turn the description into a specific coverage question

Section A1-1 of the GDV model terms AVB BHV, October 2026 refers to the business and activities specified in the policy schedule and endorsements. This nonbinding model suggests a useful check: does the written risk description match the customer’s confirmed operations? A particular proposal is governed by its own terms, schedule and agreed additions.

Compare more than the proposal heading and company name. Read the actual activity description. If it says only trading while the customer also installs products, that difference needs an answer. A general brochure does not resolve it. Make the question answerable using concrete information: “The business supplies and installs the components described; how is installation included in the proposed contract?”

Link each confirmed activity with the cover requested and the insurer’s response. Use plain sentences the customer can check. Where policy terminology is narrower than everyday business language, explain that particular difference. Customers need no insurance vocabulary to say whether they repair other people’s equipment or merely sell new equipment. Translating that information into the appropriate insurance question is your task.

Separate your customer’s work from subcontractors’ own cover

Subcontracting raises two different questions: what responsibility does your customer assume by awarding the work, and what cover does the subcontractor hold itself? GDV model section A1-1 includes claims arising from awarding work to subcontractors, while excluding those subcontractors’ own liability and that of their employees. This is a specific model provision. Check how the selected insurer addresses both sides in your proposal.

Establish who contracts with the client and who performs each task. A partner logo on a website does not answer that. The business might introduce a service, offer it jointly or owe it to the client and subcontract performance. Keep those arrangements separate before looking for suitable wording. Interpreting a disputed contract or determining individual legal responsibility may require the appropriate qualified professionals.

A partner’s insurance certificate also answers only part of the question. Check its connection to that exact company, the stated activities and the period concerned. A certificate displaying a high limit does not replace examination of your customer’s own policy. Discuss how new partners and changed divisions of work will enter future internal reviews, so the description remains useful after the initial proposal.

A mixed business illustrates the value of precise verbs

The following business and all percentages are fictional. The conversation structure is a recommendation for preparing your own advice.

A company calls itself a workshop equipment trader. Its director describes revenue as 70 percent sales, 20 percent installation by its own staff and 10 percent repairs to existing equipment. These shares total 100 percent. The only proposal currently available for comparison describes the activity as trading. Your first decision therefore concerns the scope of activities before comparing premiums.

Ask about installation. Employees deliver cabinets, position them on site and secure them. Repairs also cover equipment the company did not originally sell. Both points expand the picture. List them as separate activities in the enquiry and ask the director to confirm the description. A blanket phrase such as “usual ancillary work” would conceal the distinctions you have just established.

In this example an independent partner makes electrical connections. Ask about the contractual arrangement. The director explains that her company sells the complete service and appoints the partner. Record its subcontracting role separately. This does not determine whether a future claim exists or is covered. It does identify the arrangement the insurer needs to assess when preparing its proposal.

For two existing proposals, follow a practical sequence: submit the same activities first, then compare responses and conditions on that common basis. If only one insurer includes the repairs described, the premium difference alone is an incomplete comparison. Show the customer what service each price relates to and which unresolved point needs answering before a decision.

Keep locations and affected property visible

Record where the work takes place. A repair in the business’s workshop and work on equipment at a customer’s premises can raise different policy questions. Separate workshops, warehouses and work at third party locations. Explain how other people’s property is used: is it worked on, stored, rented or merely touched accidentally near the work? This prepares focused questions about the relevant terms.

An address alone does not describe a business location. Ask whether it is used for manufacturing, storage, sales or administration, and which company operates there. Several legally distinct businesses can trade under one brand. Match the intended policyholder to the operations described. Shared rooms or similar company names justify a question; they do not establish automatic inclusion.

For foreign locations or assignments, record the country and activity expressly. GDV model A1-1 requires a special agreement for foreign establishments; A1-6.8 separately addresses certain overseas situations. For the business description, first distinguish an establishment from a temporary assignment. Detailed overseas coverage assessment then follows the countries, activities and proposed terms. A German registered address does not settle that question.

Distinguish damages from performing the promised service

Ask what result the business is paid to deliver. This helps explain what it owes as its own service and what additional losses could affect others. GDV model A1-3.2 distinguishes contractual performance and rectification, among other matters, from the cover described. Correcting defective work is a different starting point from additional damage to somebody else’s property.

Use two separate descriptions: “The incorrectly supplied component needs replacing” and “The component damages another item.” Ask the customer to explain the promised service and possible consequential damage. The actual claim still needs assessment. Separating the descriptions turns a general wish to cover every complaint into questions the insurer can answer.

Defending unfounded claims is also part of liability insurance: section 100 of Germany’s Insurance Contract Act names this alongside indemnification against third party claims. This helps explain the value of an appropriate activity description. It provides a basis for assessing liability claims within the agreed scope. The description alone cannot establish a personal promise to settle a particular complaint.

Describe changes before requesting the next proposal

Compare the existing description with planned developments explicitly. If a trader intends to start installing products, identify the start, work and products involved. If it merely plans an additional warehouse, describe that location. This keeps different changes from disappearing under the vague heading of growth. Ask the insurer about the specific new activity or establishment and link its answer to the project.

Do not prepare the enquiry around a blanket assumption about automatic cover for new risks. GDV model A1-8 treats extensions of insured risks, while A1-9 addresses newly arising risks with their own requirements and limits. Read the actual contract rules. Clarify any notification or agreement needed for the individual project with the insurer, using the existing policy and the proposed change.

Finish with a confirmed description and clearly identified outstanding answers. Customers should see which activities the proposal already includes and which still need a response. Only then does comparing conditions and premiums become informative. Your team also gains a reliable baseline: everyone works from the same described business and can assess subsequent changes against it.

Address unclear answers at the activity concerned. If a customer calls occasional repairs “really just service”, ask what action is performed and on which object. Check together whether the description conveys it clearly. For an unresolved point, identify the missing information and who can supply it. A workshop manager may explain operations more precisely than an accounting overview. Record conflicting accounts as points to clarify. This creates a verifiable description of actual operations on which the insurer can base its response.

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