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Archive for March, 2011

Why we love compare business insurance websites.

Thursday, March 17th, 2011

If you have read any of our previous posts, we have said in the past that we have not time for websites that, “offer” to compare business insurance. All they do is compare price. You do not get advice, you do not know whether you are getting the cover/excess you need and making changes is a nightmare.

But, and it is just a tongue in cheek one today, this week we have picked up 7 new customers purely because they were through one of the sites that has managed to claw is way to the top three in Google. Of course, we cannot say which one because of our clients confidentiality. The issue was, that the clients either had policies that were woefully inadequate for their needs, even going as far as not having the right cover at all or when they tried to make changes it took ages and ages and ages (repeat to fade).

So, for one week only a business insurance broker is proud to say, that because of the shoddy service provided, we love the comparison sites as we feed off their unsatisfied customers.

Why should it take three weeks (weeks, not days) to make a change, why should an IT contractor find out that their policy excludes work at clients premises and why should the prices for mid-term alterations be way, way in excess of what the market wants?

The simple reason is, that they compartmentalise everything. Their sites force you into a certain product ranhge, which is nice and cheap. Them when you have a claim (that is not covered) or an issue with your policy, you are told that it was you that “positively chose the particular contract”.

You have no real feed back, because, as you were not advised, you cannot claim that you were mis-advised, if you get my drift.

Anyway, whilst we know these sites will be around for a while, we just hope that they will learn to treat the customer in the way a normal broker would. This will stop the whole industry being tarred with the same brush.

Posted in business insurance, compare business insurance | Comments Off

Business equipment – worldwide cover

Wednesday, March 16th, 2011

I have just tried to phone one of our customers about an ongoing claim under his existing business insurance package policy. Three days running I left a message, only to receive an email today saying he was travelling in Alaska and couldn’t get his messages.

Now, as his broker we are constantly thinking of his insurance demands and needs. One of these is, he is travelling around the world, no doubt he has his Apple laptop and smart phone with him. We have these insured under his office insurance policy, but the has not told us he is taking these items worldwide.

I am quite sure he does not want me to start asking him about extending his policy to include portable electronic equipment anywhere in the world, during his trip to Alaska. But, if his laptop is damages at the airport or stolen, we will be the first port of call and if he finds out he does not have the cover, we will be accused of not doing our job properly.

So what do we do? Checking his file, we sent a declaration and it was completed less than three months ago saying that they only needed portable equipment at £5,000 anywhere in the UK. Therefore, if a polar bear eats his laptop, we cannot be at fault. But, that does not help our relationship if we refer back to the declaration.

The solution is therefore that we will temporarily arrange cover for him, at our cost, for a five day period, until he is back in the UK. Then, we can just drop him a line asking for him to reconsider the cover he has, in light of his business trips.

In addition, we have to ask what type of work he is doing in Alaska as most policies have a product liability exclusion for exports to the US or Canada.

We know the customer is always right, but sometimes they need a bit of help in being told what is right. The next time you get a review document through from your business insurance broker, please take the time to read through exactly what cover you do, and do not have. I know it can be a bit of a pain and a bind to read through everything but it is sent to you for a reason and even if you can spend half an hour reviewing it could save you money (from uninsured losses) in the long run.

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Flat roofs – the importance of declaring this to your commercial insurance company

Tuesday, March 15th, 2011

Back in the 1970’s, it became very popular to put extensions on residential properties. These were usually single storey, at the rear of the property and done fairly cheaply. If the property had a slate or tiled roof, planning permission (back then) did not insist on the extension having the same roofing materials.

As a result, flat felt roof extensions became very popular. Now, anyone that has had an extension or work on their house will know that it is usually such an improvement, that it looks fantastic when first completed. But as time goes on the flat roof starts to suffer the effects of the UK weather, sun, rain, frost and snow. A typical flat felt roof, will last around 10 years before it needs either some serious repairs or, more usually, a complete replacement.

Now, lets think about how this affects commercial insurance policies. In the home, if your roof starts to leak, you are usually aware of this very quickly and will try and do some sort of repair or speak to your insurer.

The effects on, for example, a shop insurance policy can be more devastating. Leaks usually occur in areas where you do not always see it, overnight or worse still over the weekend. If you have a flat roof, a small tear can soon be a gaping hole and a magnet for rain. There is another issue though and that is the ease with which criminals can break in. If you were breaking into a property, would you rather go through the door, roller shutter or window (in full view) or climb on the roof, cut the felt and the prize up a few wooden boards?

If you do have a flat felt roof, there are two things you must do. Firstly, declare this to your business insurance broker, they then need to decide whether this is declared to your insurer or not. Secondly, check if you have any conditions or warranties. You will probably find that you have to get an independent contractor to check it every year or two and to rectify any damage. Some insurers will completely exclude losses from a flat roof over ten years old, which could cost you a pretty penny.

Posted in business insurance, business insurance broker, flat felt roofs, shop insurance | Comments Off

Employers Liability Tracing Office

Monday, March 14th, 2011

A change is affecting the UK business and commercial insurance industry from the 1st April 2011. As with many legislative changes, it is relatively minor and it is designed to fill a gap that has existed in the past.

In the 1950’s and 1960’s, in the UK, many workers were exposed to asbestos and also various toxic dusts when working in mines. We now know that working with these products and in these environments basically ruined peoples respiratory systems through various, incurable, diseases. It has taken years and years for both the diseases to peak and also for the insurers, for the employers liability, to be traced.

The rules were changed that employers needed to keep their certificates of employers liability insurance for a period of 40 years. This was designed to help the government trace who the insurers were at the time, rather than the NHS having to pick up the bill. This system has bene in place for a few years and does work.

The latest change is that the Employers Liability Tracing Office, which is an independent industry body, comprising of members who are employers liability (EL) insurers. From the 1st April, we as business insurance brokers, on behalf of our business insurance customers, need to provide additional information for both new business and renewals regarding the Employers Reference number.

We are not 100% sure on the the exact reason for this. It is not government funded, so it does not tie in with a database to check if businesses have adequate EL cover. It could potentially be so that insurers are fully aware of all their commitments for additional and subsidiary insured businesses. We will just have to wait and see and find out exactly the long term nature of this database.

If you are asked, during the business insurance quote process, to provide your employers reference number, do not worry as this, from the 1st April 2011, likely to be a legitimate request.

Posted in commercial insurance, employers liability insurance act 1969 | Comments Off

Commercial insurance – why should I use a broker?

Friday, March 11th, 2011

If you are looking for commercial insurance, you will be faced with three, main, choices. In no particular order these are use a broker, go direct to an insurer or use a comparison website.

A small leap of faith is required now. You need to imagine the insurance distribution network as an upturned triangle. At the “wider” bottom you have various differet distribuitors, including brokers, agents, intermediaries and the comparison sites. As you gradually move up the triangle though, you start to narrow down the actual providers of the insurance. It is impossible to say at any one give time exactly how many insurers there are providing a particular type of business insurance. The main reason for this is that Lloyds of London is full of different underwriters and syndicates that may, or may not, be involved in the provision of different types of cover.

Going back to our original question, why should you use a business insurance broker, instead of going direct or using one of the comparison sites?

Firslty, it goes without saying that direct commercial insurance does not offer you any choice, whatsoever. If you are looking for a mid-priced family hatchback, used, at £10,000, you do not go to a dealer that only has one type of car on his forecourt. You of course go to a dealer that offers choice.

So, it is the same when you go direct to an insurer. You have no way of knowing if they are giving you the best deal.

What about the sites that promise to “compare business insurance”. Do they actually compare the insurance or do they just compare the price. Well, legally they have to prove they are doing the both. But, in reality they are only comparing a few products based on price. How do you know whether the site you have gone to is offering you identical, better or worse cover than you have at the moment? It is difficult. You may sit down at your PC to compare quote A, B and C. However, you do not want to sit there and plough through three policy wordings that are up to 80 pages long.

What is the solution? Have you guesssed yet? Use a business insurance broker. There is no other option we would recommend. Of course, as an independent broker ourselves, we would say this wouldn’t we? We speak to hundreds of people every week and they all want the same thing, to speak to an individual, a human being, someone that can discuss and advise on what they need, do not need and importantly what to do when they make a claim.

As you are in business, you have the choice though. No-one can force you to go tho a broker but, when we can usually get the same, if not better prices than most of the websites out there, and you get free advice as well, there really is no other option.

Posted in business insurance broker, commercial insurance | Comments Off

Commercial insurance – replacement costs

Thursday, March 10th, 2011

If you have a commercial insurance policy at the moment, it will be covering two things in the main. Your business assets (buildings, contents and stock) and your business liabilities (employers, public and products).

We are going to address the issue of replacement costs for your business assets here. Stock is easier, because you will have purchase receipts or it will be easy for the insurers to work out what the replacement costs will be.

For your business assets, things are slightly more difficult. What happens for example if you picked up an absolute bargain on a forklift truck, you may have only paid £5,000 for it, but to replace it would be three times that amount.

What you need to do, is to insure your business contents for what it would replace in today’s market place. Now, it may be that you are confident that you could easily replace your £5,000 forklift with a nearly new one for £10,000, instead of a brand new one at £15,000. In this case, you would be OK to cover it at the £10,000.

But, if you insure your business contents for £100,000 and, then you have a small loss, say a break in, and the insurers say that it would cost half a million to replace your contents, then you may find your loss settlement is reduced by 4/5ths. Why is this? Because you have not been insuring for the correct value. Technically the insurers have only been receiving 20% of the premium that they should have been. Imagine a wholesalers insurance policy, 60/70% of the total premium relates to the contents. Therefore, if you are under insuring, then insurers will reduce any claim accordingly.

So, going back to the question, what should you do about your replacement costs? The sensible thing to do, is when your annual insurance premium is due for renewal, take some time to actually review the schedule of insurance. It may well be that you need to speak to your business insurance broker to go through all of the sums insured.

If you are doing all you can to insure for the correct amount, you do have some leeway. Whilst all policies will contain an under-insurance or average clause, they also note that you are never going to be 100% accurate with your sums insured. For this reason, there is usually a 15 – 20% leeway. As long as the amount you insure is within this margin of error, with the correct amount, then most insurers will not penalise you.

Posted in commercial insurance, warehouse insurance, wholesalers insurance, wholesalers insurance quote | Comments Off

Commercial insurance – minimum cover requirements

Wednesday, March 9th, 2011

We had an enquiry yesterday from a customer looking to get an alternative commercial insurance quote. We talked through what they currently had and there were some significant gaps in their cover. The main issue was that they had gone on to an online provider, where you basically pick and choose the cover that you think you need.

So, they had picked stock, contents and employers liability. The reason they were looking around was that they had a potential product liability insurance claim in the offing and, as you can probably guess, there was no cover on their current policy.

The providers of the wesbite, who were a broker with the cover then placed through the Lloyds of London commercial insurance market, basically said “tough”. They told the customer that the option was there for them to pick products liability (and the public liability which they also did not have) and as they had not chosen it, there was nothing they could, or would do.

We have provided the customer with a quote, including the missing liability covers, goods in transit and computer breakdown, all for less than they were paying. Whilst this is some good news, they now have to try and fend off a claim at their own expense.

The question they asked me, was what is the minimum cover requirement? We explained that basically the minimum cover is the minimum you are legally required to have ie employers liability and maybe some engineering inspection cover on items of mechanical plant (ie fork lift/pallet trucks).

So, the website was not technically doing anything wrong, but the issue was that they did not make it clear to the customer that the cost of adding in the missing liability covers would far outweigh the potential claims costs.

Now, the customers turnover was jsut shy of £1m, so they can take their case to the Ombudsman, but this wil take a long time and I have a feeling that the Ombudsman will rely on precedent that a business person should be able to have made a business decision about their insurance requirements.

The big question is therefore, what should you do in future? Speak to a business insurance broker, when we say speak, we mean speak, call them and discuss what you need and more importantly what they think you need.

Posted in commercial insurance, product liability insurance | Comments Off

Business insurance – outside of the UK

Tuesday, March 8th, 2011

I have, for my sins, worked in business insurance for over 25 years now. I have only worked for 3 different employers which is fairly low by many standards. I remember back in the early 1990’s when I worked for the UK’s largest insurer, that we were told that the European trade barriers were going to be ripped down. It was going to be as easy to trade with my Portuguese counterpart as it was with the lady running a business round the corner.

We are told that great things were going to come from this and it would revolutionise our world. We would soon be selling shop insurance from Scotland to customers in Greece. The only barriers were the language and the legislation.

Sitting here in 2011, you know exactly what I am going to say and that is that nothing has really changed. If you want to insure a business that is domiciled in the UK, then you insure it with a UK insurer, the same goes for every other country.

The real issue relates to the liability cover you see, any claims for liability insurance are notorious for going on for years and years. For example, we have a personal injury claim against an insurer that is now entering it’s fifth year. They have paid out over 6 figures and are estimating the total cost to hit £1,000,000 over the next 5 years.

Imagine if this loss had occurred to a French worker in France, the costs would be considerably higher with translation work and interpretation work for the different laws.

So, the rule of thumb is, you insure your business in the country that it is domiciled or based.

Posted in business insurance | Comments Off

Business insurance – flood loadings

Monday, March 7th, 2011

Back in 2007, many parts of the UK suffered some of the worst flooding seen for decades. The main reason why it was so bad, was the sheer scale of it all. Hull and it’s surroundings were hit twice during the alleged summer. In this area, it was relatively confined. Further towards the South West, in the Oxfordshire/Gloucestershire area, the flooding covered a much greater area. Dozens and dozens of square miles were either under water or under threat of flooding. The rain just continued to fall and rivers all over the area were bursting their banks.

It wasn’t just homes that suffered, businesses as well. This had a knock on effect on business insurance policies and renewals. Insurers did not look to increase their premiums, what they tended to do was to increase their excesses. So, instead of a standard £250 excess, you would find a renewal issued with a £1,000-£5,000 flood excess.

In a way it was shutting the door after the horse had bolted if applied to a risk that had already had a loss. But, what the insurers did was to apply these loadings essentially to the whole geographic area.

As a business insurance broker, we took exception to this broad brush approach, and on individual renewals we renegotiated any increased excesses back down again.

But, as we move into 2011, we are seeing a change. There are many reasons for the floods, which have thankfully not re-occurred in the past 4 years, but, and it really is a big but, it could happen tomorrow, next month or not for another five years. Insurers are however cautious beasts and are now starting to apply a double whammy, increased excesses and increased premiums. When you renewal hits the doormat, you need to look out for the small print.

We were asked to quote by one customer, who showed their existing renewal to us and, on page 6 of 7, near the bottom, there was a single sentence noting that the flood excess had increased to £5,000 and there was a 100% premium loading.

Some insurers are more realistic and have better systems than others so they can be more scientific about when and where they apply loadings or excesses. This is something that we, as brokers, will do for you.

Posted in business insurance, business insurance broker, flood insurance | Comments Off

Internet retailers insurance

Sunday, March 6th, 2011

In the good old days if you were selling B2C, business to consumer, you would do this in two ways. Either through a traditional shop or, to a lesser degree, via mail order.

As far as insurance was concerned, you would get yourself a commercial combined (mail order) or shop insurance policy. It was fairly simple, if you operate from a shop front type premises, then nearly every single commercial insurer in the land would have some form of shop policy.

But, as we moved into the mid 1990’s, post dot.com boom and bust, the world settled down a bit. It was easier to set up a website to start selling whatever you wanted. In 2011, for less than £30 you can get yourself a domain name and a website with shopping cart. There is a small issue as far as getting a suitable policy though. Not all shop policies are suitable to provide internet retailers insurance.

If you are looking for this type of quote, we have a number of different insurers available to us who are happy to provide this type of cover. What you need to make sure is that your schedule notes exactly, and we mean exactly, what you do. Therefore, in the event of a loss you do not have an insurer saying that you did not declare the correct information.

As we always say, you are better speaking direct to a busines insurance broker. Do not rely on a policy sold over the net to provide the cover you need, when you need it most, after a loss.

Posted in internet retailers insurance | Comments Off