Archive for September, 2009

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Restaurant insurance – tenants improvements

Thursday, September 24th, 2009

As with most businesses, restaurant owners usually lease the building from which they trade.

As a result, in the terms of their lease, they will pay a percentage or proportion of the commercial building insurance premium that the landlord pays.

When arranging their commercial insurance restaurant policy, the restaurant owner will arrange cover for their business assets (contents) and stock. However, there is an additional cover that should be considered as important as business assets cover.

The cover we are talking about is tenants improvements. Most restaurant owners will improve the building through the installation of laminate flooring, lighting, partition walls etc. These are not the responsibility of the building owner so he will not insure them. It is therefore up to the restaurant owner to cover this on their restaurant insurance policy.

The good thing is that tenants improvements insurance is much cheaper than the premiums charged for business assets. This is because the contents are more susceptible to theft.

Tenants improvements are of course less likely to be stolen so the rating is adjusted accordingly. Most new restaurants will spend £20-£25,000 as a minimum on improving the building. In the event of a flood, most of this may need replacing if it included walls, flooring, wiring and even a fixed bar.

Getting a competitive restaurant insurance quote simply involves going to a business insurance broker and getting them to look around for the best quote.

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Professional indemnity insurance – what do insurers need to know?

Wednesday, September 23rd, 2009

When looking around for a professional indemnity insurance quote, the choice of companies offering cover has increased in the past few years.

This does depend somewhat on the type of business you are involved in. Traditional purchasers of professional indemnity insurance, such as solicitors, accountants and mortgage brokers are finding it tougher to get competitive cover. A lot of insurers are simply shying away from these types of business and looking to offer cover to those that they perceive present less of a risk.

During tough economic times, all types of insurance claims increase. When businesses are faced with less cash they are more inclined to make claims for smaller amounts. The more widespread availability of commercial legal expenses insurance has made this easier.

For other businesses such as computer/IT consultants and other service providers there are still competitive options to be had.

When approaching an insurers for a PI quote, you will need to have available details of your businesses financial history and some decent estimates of future activity. Most professional indemnity policies, similar to commercial liability insurance, are based on past activity as this is the only “definite”. The premiums are usually calculated based on your past three years, if available, fee income.

You need to be careful to declare your fee income as well as you other turnover. For example an IT consultant may also supply hardware/software. Depending on whether the software is bespoke or shrink-wrapped can affect the premium considerably. The bigger risk is in the recommendations you make for which you receive a distinct fee.

Most insurers will have a simple one or two page quote request form. This is all that is needed to get you initial quote, if you choose to accept the cover then you will usually need to complete a more detailed proposal form within 30 days of the cover start date. Your full professional indemnity policy will only be issued once insurers have seen, and accepted, your proposal form.

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How do insurance brokers earn their keep?

Tuesday, September 22nd, 2009

Business is all about one company supplying either a product or a service and earning a fee for doing so.

Selling tins of beans does not necessarily involve adding a fee but the selling company will add their margin of a few pence to each tin.

Commercial insurance brokers traditionally earn commission on each policy sold and/or a fixed fee.

Commission is payable to a broker for placing an insurance contract or policy with an insurer. Personal lines insurance (house/car/travel) can earn the broker up to 40/50%. Whereas commercial liability insurance and business car insurance may earn commissions as low as 7/10%. It depends on how much the insurers are likely to earn the level of commission they will pay.

There is transparency in the process now because you are legally allowed to ask broker how much they earn as part of the process of selling you a policy. You will of course be less inclined to pay a broker £1,000 per year if you know they are going to keep £500 for the privilege!

Many brokers do not advertise this service, try it and see whether your broker is really giving you value for money, particularly when you ask them what they do for their fee.

Brokers that charge a lower fee are more than likely to pass this onto you in the form of cheap business insurance.

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Free commercial buildings insurance quotes

Tuesday, September 22nd, 2009

Any landlord will usually have in place commercial buildings insurance for their property or properties.

Over the last few years there has been a slow, but consistent, decrease in the premiums charged for this type of cover. Most commercial insurance companies tend to chase the same types of business that they know, historically, have made them more money.

These tend to fall into two categories. Commercial package insurance, such as shop and office insurance and property owners insurance.

Even if you have a policy whereby the premium level has not altered much over the past few years, you can still look around for a cheaper alternative.

The beauty of looking around or comparing business insurance, is that there is no cost at all in doing this. It may take some time for you to dig out your current schedule of insurance and make a few phone calls but at the end of the day, half an hour on the phone is worthwhile if there is a premium saving at the end of it.

A business insurance broker will already know which providers or insurers on their panels are ones that would quote the best for your buildings. What we mean is that insurer A may be happier underwriting blocks of flats insurance and buy to let insurance whereas insurer B may prefer more commercial property insurance such as warehouses, industrial units and even unoccupied building insurance.

The other key point is that if you have not had a claim or loss in the past three to five years this can you get you up to 30-40% extra discount on your premiums. Insurers love statistics and if you have historically been claims free, particularly through the summer floods of 2007, you are more likely to stay claims free in the next twelve months.

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Warehouse insurance – goods in transit extension

Monday, September 21st, 2009

When looking for a warehouse insurance quote or renewing your annual policy there are certain “add-on’s” or additional covers that your insurers should include.

One of these is goods in transit insurance. Commonly called G.I.T. (yes, it’s true!) this will give insurance cover for your stock whilst being moved from location a to location b.

Most importers and exporters will have some form of warehouse cover as stock insurance cover is important to them. If they are receiving stock form a third party then it is normally covered until they sign for, or receive it.

However, if you then decide to move the stock yourself you have two options. To move it in your own vehicles or get an approved carry (DHL etc) to move the stock for you. In a later post we will talk about the lack of cover from couriers (IE restricting it to £50 per kilo etc). However, the cover we are talking about here is if you move this yourself.

If a lot of your customers are nearby, you may choose to move stock in a van or even in your car. If the car is in an accident or broken into, you want to make sure you can claim for any stock that is stolen.

This is where you need to check if you have goods in transit insurance. Granted, you are not going to drive an artic around, so you may only need a limit between £2-3,000. But you would be surprised how many insurers do not include this.

If it is included you will normally have conditions that the vehicle has to be locked and overnight cover is usually excluded unless in a locked building.

Speak to your insurance broker and check the level of cover you have, and makes sure it covers stock in YOUR vehicles, not just third party couriers.

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Business insurance – who should read the small print

Monday, September 21st, 2009

One of the perceived problems of commercial insurance policies is that they contain onerous terms, conditions and warranties which may lead to some businesses feeling they are insured, when they are not.

The reality of the situation is that this is not the case. When looking for a business insurance quote, it is all too easy to look at the bottom line price and use this as the major deciding factor when taking out a policy.

It is of course easy to see that this should not be the case. But what is an entrepreneur to do when they are faced with an array of quotes which, to be honest, all look very similar?

Don’t worry though, because the answer is out there, use a broker. In all areas of business there are middlemen whose job it is to find a product or a service for you. Yes, they earn a fee or commission for doing this and it is too easy to think they earn this for nothing.

You need to look beyond this though and understand that the brokers reputation depends on them finding you the right product. Word of mouth is a great selling point, if a broker has sold you a duff insurance policy which didn’t pay out, when it should have, you will tell everyone. So, the brokers go out of their way to make sure this does not happen and they look for the right product for you. In addition, the Financial Services Authority, who authorise and regulate every single commercial insurance broker, make doubly sure that they are looking after their customers.

So, to answer the question. It is up to the brokers to read the small print and when they offer you a product to make sure it is suitable. Their job is not only to get you the cheapest insurance quote, but to offer one with wide cover and reasonable terms.

This is where we have an issue with sites that offer to compare business insurance, what they are comparing is premiums in the main. No-one is there to offer you advice between product a at £1,000 and product b at £1,250.

In the majority of cases, a broker will get you a better or equal price. You can always try the two and see who comes out best. We can almost guarantee that you will happier buying a product from someone you know you can talk to in the event of a problem.

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Fish and chip shop insurance

Sunday, September 20th, 2009

There are many choices and decisions a business has to make throughout the year. At some point, the business owners will need to consider what to do for the insurance renewal.

Insurance premiums are increasing in some areas but if you are prepared to spend some time you can usually save yourself some money, but caution is required.

If you are looking for a fish and chip shop insurance quote you will find that most commercial insurance companies skew their rates or premiums to the higher end. Whilst they may be happy to underwrite your business, many of them tend to charge higher premiums because of their experience of the trade.

Fish & chip shops, and other types of takeaway insurance tend to either run very well (from an insurance perspective) or very badly. The reason is that if they have a fire claim, it is usually major. Their liability claims tend to be higher as well. With the use of cooking fats there are more likely to be spills in the kitchen, which can lead to staff tripping, which in turn leads to claims for employers liability.

There are companies that insure enough of theses businesses to make money. But you need to be very aware of the terms and conditions. This is where using a commercial insurance broker is useful as they will seek out the quotes for you and are obliged to point out all of the terms and conditions.

You may need to clean your full extraction system on a twice yearly basis with some insurers. If you cannot access this, as your shop is beneath flats or offices, then you may find yourself in a difficult position in the event of a fire.

Also, certain insurers insist on there being approved anti-slip matting through out the premises, both to protect customers and staff. This can increase the cost for you.

Simply put, if you receive a quote which is very competitive make sure you are aware of any conditions which are more onerous than your business can accept.

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Commercial insurance companies – talking up the market

Saturday, September 19th, 2009

UK insurance companies have had a reasonably tough time over the past five years.

The pressure on premiums has been high and insurers have been underwriting certain classes of business at what have been uneconomic rates for them.

Whilst we have lost a few of the major brand names over the past ten years, such as General Accident, Commercial Union and Norwich Union, it does not necessarily mean that there have been fewer insurers.

Some of the companies have got bigger but there have been other European insurers who have been looking for growth in the UK market.

Pressure on rates is particularly strong for certain types of business. For example if you were looking for a combined liability insurance quote five years ago the minimum premiums most insurers were charging were just a few hundred pounds. Nowadays, though minimum premiums are likely to be £1,000 and upwards.

Some of the major insurers are now trying to talk the market up and looking to justify increases. There are still bargains to be had on business that insurers have always made money on. If you are looking for a commercial property insurance quote you can still find some good premiums, the secret is of course to obtain more than one quote.

It tends to be the classes of business where there is potential for increased liability claims where there are price increases being sought. Pub insurance, restaurant insurance and fish and chip insurance are the classes where we are seeing increases, both in renewal premiums and new business prices.

Your insurance broker may look to sell you an increase at renewal. If you have had a few claims this may be justified but you need to look across a five year period rather than just twelve months.

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Business continuity and disaster planning

Friday, September 18th, 2009

Every business should have a disaster plan in place. This does not need to be necessarily detailed, but thought has to go into what would the business do in the event of a disaster, such as a flood or a fire.

Using a simple search on the internet you can find reputable sites that list the sorts of things you should think about. Some of the companies are trying to sell you software but you needn’t pay for this. A good starting point is the business link website here.

As part of your disaster planning you must think about business interruption insurance. However well prepared you are, your business will suffer financially as a result of a loss. You do not want to bear this cost as it will be difficult enough getting the business back onto an even keel.

Most business insurance policies will either include interruption cover “as standard” or you will have the option to include the cover. For example, office insurance or shop insurance policies will tend to include cover up to a limit of indemnity of £250,000 for a 12 month indemnity period.

What this means is that you have a maximum amount of cover for up to 12 months. You have to be careful though and consider what would happen, if there was a fire, and your business takes more than 12 months to rebuild. For example hotel insurance policies should ideally have an indemnity period of 24 or 36 months as it will take time to rebuild. Whereas office insurance policies may be OK with a 12 month indemnity period as they can usually rent an alternative office nearby and be up and trading again quite quickly.

If you have a commercial combined policy, for example warehouse insurance, you may need to specify that you need business interruption as it not always automatically included. This is where it is beneficial to speak to an insurance broker as they are professionals.

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Commercial building insurance – reinstatement

Friday, September 18th, 2009

In the UK, you generally have two types of insurance, general insurance and life assurance.

In general insurance, this can be further split into commercial insurance and personal insurance. Personal insurance covers houses, cars and travel.

If you look for home insurance you do not necessarily need to declare the rebuilding cost. Most insurers nowadays will give cover up to £250,000 to £500,000. It is only your building reinstatement is in excess of this that it will need to be declared.

Although residential prices have dipped around 25% and commercial property prices up to 50%, rebuilding costs have stayed relatively stable.

When seeking a commercial property insurance quote you will always need to declare a reinstatement cost, sum insured or rebuilding cost. The reason is that every commercial building is different.

We are asked on many occasions how you should estimate the rebuilding cost. The key thing is that the purchase price of the property bears no resemblance to the reinstatement cost. This is particularly so even when commercial property purchase prices have decreased.

If the property is financed then you should get an idea from the finance providers of the correct amount to insure for. A rough rule of thumb for a modern industrial building (less then 30 years old) is £50 per square foot plus 20% for extras.

Commercial building insurance premiums are relatively stable and reductions in premiums are still available.

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