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Archive for the ‘commercial insurance’ Category

Be careful with increased business insurance excesses

Thursday, March 31st, 2011

Everyone who has ever had a business or commercial insurance policy will be aware that excesses apply to nearly all covers. An excess is the amount that you, the business owner, will pay towards any claim. If you have ever had to replace a car windscreen, this is usually a painless process as you just pay the installer your £25 or £50 excess. It doesn’t affect you no claims and to be honest, £50 for a new windscreen is not bad, particularly when they can cost over £1,000 to replace in many modern vehicles.

Returning to businesses, what is, and what is not a reasonable excess? We are seeing more and more alternative quotes which are cheaper than ours, purely because they have a huge excess. We offered to renew a restaurant insurance policy the other day. The customer had been with us for years, had a couple of small claims but over the six years, the insurers had just about made a profit. So, we could not expect the insurers to offer renewal at a huge discount, but they did maintain their £200 excess.

The customer told us that they had been pursued (they did use the word stalked!) by an online business insurance broker. Who, miraculously had offered a cheaper premium. As the customer had been with us for a while, they forwarded the email. All looked OK except their excess was £250. So, going back to our £50 on the windscreen, it is not a huge difference, but a difference.

However, in the small print, on page 9 of 12 in the alternative quote, it said that theft and malicious damage claims were subject to an increased excess of £750. The two claims they had were for a break in and smashed window, so, if they had gone with alternative, for every claim they submitted, compared to our renewal, they would be a whopping £550 down.

Thankfully, our customer realised that this was almost a deliberate ploy (to “hide” the excess) and renewed for a further year. If you are looking around for an alternative at renewal, please make sure you read every, single page.

Posted in commercial insurance | Comments Off

The importance of checking the amounts covered under your business insurance policy.

Tuesday, March 22nd, 2011

We have a customer, with a basic online retail insurance policy. When we say basic, we mean it is a package policy with the standard covers. Not additional covers, just liabilities, contents, stock and a few other package sections.

Now, the customer has been with us for over five years. At new business stage, we went through the whole fact find process. At every renewal, we send them a new insurance schedule and a letter that says they must check that the sums insured are adequate.

I think you can probably guess what is coming next. The customer phoned us to make a claim, they have had a break in over the weekend and some of the electrical equipment they owned has been stolen. The items stolen could probably fit in a sports bag, a laptop, camera, hard drive and some cash. Total cost to replace the contents is approximately £3,000. But, their contents sum insured was around £1,000.

We have had to explain to the customer that not only will they not have their full claim paid, there will also be a consequent reduction for average. What this means is that s they have only paid for £1,000 of contents then they will only receive £1,000/£3,000 (ie one third) of any potential settlement. So, even if they claim for the maximum, they will not get the £1,000, but will get around £333. Once the excess of £200 is taken off this, their claim for the contents is not very much. There will be a full payment for the cash, but the contents is what is going to hurt.

Now, we are a great believer in the customer always being right. But, we cannot do any more than explain to the customer each year that they must, must, must review their sums insured. You cannot possibly expect to be covered for more thna you pay for.

It is the same with every single commercial insurance policy that we sell. Imagine going to your local supermarket and picking up ten bags of sugar and then only trying to pay for two of them. It doesn’t work, the issue with insurance is that if you do not read what you are sent, then you only find this out when you do not want to.

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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 renewal increased?

Monday, February 28th, 2011

In 2011, we are starting to see some, not all, of the business insurance companies we deal with increasing premiums on their renewals. It has always been a source of concern that they tend to buy in new business. The prices you can get for a new quote, compared to identical terms for, say, a third year renewal can be vastly different.

But, it is not just our industry, I am sure that every single trade carried out in the UK has their “loss leader” type business. It is frustrating for us though, because we, as brokers, tend to bear the brunt of peoples anger as we are the front end of business and are the ones that speak to the end consumers. The commercial insurance senior staff can sit in their, sometimes, ivory towers and decree that renewals will go up by x%. An astute broker will keep a close eye on things though and whether you are paying £200 or £20,000 your year on year percentage increase, form 2010 to 2011 should not be more than a few percent. Insurance premium tax has gone up, so you should expect 1%, inflation and a few other costs have pushed things up so, on clean (no claims) business, a 3-4% increase is what we would expect.

Any more than that and you may need to start speaking to your broker, or maybe anpther one, about getting an alternative. If a broker says there is no alternative, then they are not quite telling the truth. There is always and alternative, it just may be that your current broker does not have enough providers to help them get a better price for the same cover.

Posted in business insurance, commercial insurance | No Comments »

Business insurance – getting a new policy, how do I know what I need?

Wednesday, February 16th, 2011

If you are just starting a new venture, or looking around for an alternative business insurance quote, how do you know exactly what cover you need or whether the cover you have got is adequate?

In life you can either be described as a risk preferrer or risk averse. If you are averse to, or do not like, risk, then you will typically do all you can to avoid placing your business at risk. It stands to reason that if you are a risk preferrer, then you are more likely to take risks or let your business face risks.

Part of the risk averse process is to buy some form of insurance, or protection, to ensure that in the event of a risk (ie a storm) damaging your business, then you will receive financial recompense for this.

But, whilst you may look at a commercial insurance policy and think it is the same as any other, this is far from the truth. It is the small differences in the policies that, when they are all combined make you realise that there are enough differences to usually warrant paying a premium differential.

But, at a basic level how do you know what cover you need, what cover you must have and what cover is actually available? You can spend days, and we mean days, searching the internet to find information about your particular industry and the type of cover available. Or, you can do it the easy way and speak to a business insurance broker. Get the broker to recommend, advise, suggest or help you to see what covers there are available for your business. After all, it is their job.

If you are risk averse, you can spend a lot of money buying insurance policies for everything, whereas what you really want is to be able to spend money wisely and sensibly. This is where the broker comes in to help you balance what you can afford to spend and what products are available.

Posted in business insurance, business insurance broker, commercial insurance, what business insurance do I need? | Comments Off

Multi location commercial property owners insurance

Monday, February 14th, 2011

Economies of scale apply to every product or service you may purchase in life. Go to any commercial supplier and if they charge you £5 for one item, if you are looking to buy 500, you know that you are going to get a better price than £5 each. It is, in most cases, the same with commercial insurance. If you have a single policy and are looking to add further buildings, then you would expect that you are going to get a better price.

Usually, this is the case. If you have a commercial property owners insurance policy, with any insurer, then the more properties you are looking to insure, the better the overall rate you should receive. However, this can work against you as well. If you have five properties insured and you are getting, for example, a premium of £200 per property, if one of them suffers a large claim then it is likely that the overall policy is going have a rating increase applied.

The balance is, that you can have separate policies for each and every property and if one suffers a claim, it does not necessarily mean that the others will increase as well. You do of course have to declare to each and every insurer you deal with that you have had claims under different policies, but the chances are that they are going to take a fairly sensible approach to this and not penalise your other policies for a fortuitous loss.

The discounts that you do receive are not always sufficient to make you stay with a particular insurer. Every time we, as business insurance brokers, get additional quotes, we will always look not only at the existing insurers, but to see if any others will provide a better price.

The difficulty we face with insurers is, that in January they may not be looking for a particular type of business but in March they have changed their tune and are pulling out all the stops to pick up business they previously did not want. If we don’t keep a close check on this, then the customer is going to, quite rightly, drift away to a more competitive alternative.

Posted in business insurance, commercial insurance, commercial property owners insurance | No Comments »

Getting a pub insurance quote for a thatched premises

Friday, February 4th, 2011

In most areas of England, and less so in Scotland and Wales, there are still many, many thatched properties. The vast majority of these are residential, but there are still a large number used by the licensed trade. The higher risk of fire means that this does affect the availability of competitive pub insurance.

There are two different things to consider. The first is if you are looking for a full package including the buildings and the second is where you lease the building. Over 90% of the thatched properties, used as pubs or restaurants, are owned by a brewery group or property owner. If you do have an individual building you need to get insured then we can help, through access to specialist insurers.

If however you are looking for a quote for the trading risk (ie stock, contents, liabilities etc) then it is fairly easy for us to get a quote. Many of the commercial insurance companies that offer pub policies will shy away from this. The markets we have are much happier to underwrite these types of risks. The only usual requirement is that there is an “open fire” warranty applied. This effectively means that if there is an open fire then it is checked 30 minutes after the pub is closed (and the fire is extinguished).

Your landlord will probably have similar requirements under their commercial building insurance policy, so you are more than likely to be complying already with something very similar. If the thatched roof is very old, or in poor condition, you may have trouble getting damage for ingress of water (from a storm) as this likelihood is increased as the roof deteriorates. You do tend to find though that roofs are replaced every 10 to 15 years and a lot are now replaced with metal sheets at the base. This prevents the risk of fire spreading to the roof and water ingress going the other way.

The best thing you can do is give a few brokers a call. For a pub (no buildings) package quote, with approximately £30,000 contents and other covers, we can get a quote for around £750 per annum, depending on the location and other factors (including claims and whether the owners live in).

Posted in commercial buildings insurance, commercial insurance, pub insurance quote | Comments Off