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Archive for the ‘wholesalers insurance’ Category

Business insurance, metal theft and other damage

Saturday, January 21st, 2012

Over the past few years, we have all seen reports in the press about the increase in thefts of metals. Business insurance companies only ever used to be worried about non-ferrous metals, such as brass, copper, lead and aluminium. Nowadays though, all types of metal appear to fair game to the sticky fingered members of our communities.

We had one theft where £50,000 of scrap steel was stolen from a building over a Bank Holiday weekend. The neighbouring building was broken into and the internal walls were broken down. A fork lift was then used to transfer the scrap stock over three days. As it was of such low value, being scrap, they had to move a fair chunk of it over three days, in order to get the £50,000.

Overall, the cost of the claim was nearly £80,000. There was the cost of metal, the cost of the repairs to the internal walls and the cost to the fork lift that was ruined after they managed to hot wire it. Given the state of the fork lift, I don’t think they passed their fork lift driving course. Unfortunately the load bearing wall didn’t collapse blocking their path but they must have had fun driving the fork lift over their veritable assault course.

What this means is that for most metal thefts, the consequent costs are the expensive ones. An additional 60% of this claim was made up of the othe damage. If you keep any sort of metals, make sure that you have a suitable warehouse insurance policy to cover this for you.

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Getting a business insurance quote – what options are there?

Friday, December 16th, 2011

In the early to mid 1990’s, if you were looking to get a business insurance quote, you were fairly restricted in where you could go to get your quote and also how long it took. Whilst insurers where happy to work on a direct basis for car and home cover, they were n0t so keen on doing the same for commercial.

I remember working for a large insurer in the early 90’s, many were just putting a tentative toe in the water to get car and motor policies sold direct, because Peter Wood and his Direct Line model had blown everything away with how successful it was. However, a lot of the insurers still had very strong broker relationships. Brokers were up in arms that insures had the audacity to cut into their market share. To be fair, and most brokers from the time will agree, it was always going to happen. What they did not expect was that insurers would start to deal direct with members of the public and business owners. Over the past ten years though, many insurers have tried to attack this market and guess what? They have gradually failed.

We are not trying to say that being a broker is complex, but there are differences between all of the products. For example, anyone looking for a wholesalers insurance quote is not going to find this online, via a quote engine. A quote engine is where you do all the work, put all the answers in, the system makes a whole load of quite important assumptions and then throws you up a cheap price at the end. Usually there is not much thought to the type of policy you are going to get, they flog it just on price.

If you want the right product, with a bit of free advice about the cover you get, then you really need to speak to an independent business insurance broker. This is your only real option. You do not have to deal with the broker direct, face to face. Companies such as Businessinsure act independently, but over the phone and the internet. Instead of doing the work yourself, let us do it for you.

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A bit more than warehouse insurance.

Friday, August 12th, 2011

This was the topic of a phone call yesterday. A customer enquired for something that was, in their words, a bit more than ordinary warehouse insurance.

They had made, in my mind, a small mistake by going with an online provider that worked on fairly restricted categories. The customer had taken out a warehouse insurance policy and they had asked their exisitng provider if they could change the policy slightly. The change was that they were setting up a small retail showroom element in the premises. As with many businesses, it is a jungle out there and they were looking for ways to generate more income. One of these was to open up the business to members of the public.

But, their existing business insurance provider could not change their policy to include the retail element. They were trying to flog the customer a separate shop insurance policy. Albeit at a minimum premium of around £400, but the customer could not understand why they couldn’t simply change the description. I had to agree with them, they were not increasing their stock or tunrover as it was really just a trial to see if it worked. If it did, at renewal they would look at amending their cover.

To be honest, I could understand their frustration with their provider, but when they told me who it was I realised why they were being told to buy another policy. The provider in question only has one main insurer behind them. I would estimate that over 97% of the business place by this company goes to their one insurer.

As we have said before in many, many posts is that choice is the only way you are going to get a good policy at the right price. We have been questioned on this as we are unfairly denigrating the providers that only have one main insurer. But I am yet to find a valid argument against our stance. The problems this customer faced are testament to our argument.

Thankfully they spoke to us and we sorted something out for them very quicky and it was cheaper, with interest free instalments thrown in as well.

The moral is, if your existing company says that something cannot be done, this is not always true. Take the steps yourself and speak to an independent broker.

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Wholesalers insurance – roller shutter doors.

Monday, March 28th, 2011

Most businesses involved in the supply of goods from a commercial premises will usually be provided with a wholesalers insurance policy. Depending on what type of trade you are involved in, there is usually a policy that has had slight tweaks to make it suitable for you. The tweaks are in the form of not only rating (the premium charged) but also the terms, conditions, cover extensions, warranties and excesses.

For example, if you have a salon insurance policy, then you will be looking for a cover extension to protect you in case a patron claims you have injured them. If someone has slipped on some water on the floor, this falls under standard public liability. But, injury (eg through using a hair treatment) needs a specific extension.

As far as wholesalers are concerned, one of the biggest risks to the business is a break in or theft, with stock being stolen. Now, this will affect every business, but a wholesale business without easy access to stock, is like the proverbial chocolate fireguard.

So, you buy a policy to protect you against your stock being stolen. You will find that depending on three main factors, location, theft attractiveness of stock and amount of stock, the insurers will define certain minimum levels of security.

These minimum levels are a condition of the policy. I know this is re-iteration, but, if you do not comply with the security, then as you have not complied with a condition, cover is not in force.

This can be as simple as not having a key operated window lock or in more complex cases, not having an intruder alarm that is monitored to BT Redcare GSM standard. Now we come to roller shutter doors. Not being a thief myself, I would have thought that a roller shutter door is pretty difficult to get into. I used to work in a bakers for my Saturday job, many many moons ago. We had a heavy duty roller shutter door, manually controlled, with a chain from the inside, which was imply secured in place. Nowadays though, this would not be sufficient for most business insurance policies. What they are looking for, is the roller shutter doors to be secured either by two heavy duty padlocks or a metal, welded, lockable box housing the electric controls.

Why is this? Because, the thieves of today will turn up with crow bar (a big one) to lift the bottom of the door. With enough pressure, you can very quickly lift the middle of the door, roll under and Bob’s your uncle, your in.

The amount of insurers surveys we see, where they come back with requirements to make roller shutter doors mores secure, is growing. Theft rates have increased in the pas few years. Please check what security you need to have, to make sure your policy is one that does not pay out for non-compliance.

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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.

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Wholesalers insurance – roller shutter doors

Tuesday, February 22nd, 2011

If you have a wholesalers insurance policy, you need to look very carefully at all of the terms and conditions that apply to your cover. Some of these are more important than others. If your insurer can prove that you have not complied you could be faced with the potential of not having a claim paid.

The three main types of physical loss that you could suffer are wet weather or burst pipes, a fire or a break in. All of these will destroy or result in your stock being stolen.

Most warehouses will have roller shutter doors. It is the easiest and cheapest way of putting on a door that allows large quantities of stock (or vehicles) to enter or exit the premises.

Older roller shutter doors have a small door in the shutter which you enter and then unlock the main door. If your roller shutter door have locks on the floor, then these types of doors are very easy to force open from the outside with a reasonable size crow bar. Most business insurance companies that offer these types of policies will have specific requirements stating that the roller shutter door must have at least two internal locks on the doors. These will need to be at least 40 cm from the ground floor, on the inside.

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Wholesalers insurance – monthly stock declarations

Monday, January 31st, 2011

There are very few businesses in the UK that carry the same levels of stock throughout the year. Many will tend to increase their stock levels as we approach the traditional busy Christmas period. For some retailers, it is estimated that between 30-50% of their trading turnover is made in November and December.

This has a significant affect on any wholesalers insurance policy that there may be in force. We have talked before about the need to insure for the correct levels of stock. As well as ensuring that you have the correct levels of cover for your stock, you can also make sure that you are only paying for the cover you need.

What do you do from January to June when you sell most of your stock in the latter part of the year? The first thing is to make sure that you have a business insurance broker that actually understands exactly what you do and that you have wildly fluctuating levels of stock.

If this is the case, then you need to be able to notify your broker as and when the stock levels go up or down. There are formal commercial insurance policies for this, where you complete a formal declaration on a monthly basis and at the year end your insurance is adjusted accordingly. The slight issue with these policies is that most insurers only allow these for bigger companies. Typically those with turnovers in excess of £5,000,000. However, if you have the broker that understands what you do, they can agree to get insurers to amend the stock sums insured either monthly, quarterly or for any other period you think would be beneficial.

The key thing of course is to make sure that you have a broker that does not charge you an administration charge for every single transaction.

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Why you should use a business insurance broker.

Wednesday, November 24th, 2010

What does a business insurance broker actually do? In this age of internet interaction, it is easy for anyone involved in a business to get a quote direct from many different insurers. The adverts on the telly for everything from betting, to holidays, to property all tell you that you should cut out the middle man, because this saves money. But does it really?

Just as the credit crunch hit and before the recession took hold, I decided to move house. Having had a mortgage with the same provider for many years I just wondered if I could get a better deal by going direct. At that time some of the providers, like Northern Rock, were just starting to rein in their lending. So, there was still plenty of choice. But, the choice was bewildering and I really could not fathom out the differences between the products myself as it was not a financial service I have ever worked in. But, I had a rough idea of the monthly cost for repayment with the required life cover. I then spoke to an adviser who was recommended and, to put it simply, he came up with a better deal than I could have got direct. The big thing though, was peace of mind. Speaking to someone who knew what they were talking about and could explain, in a way that my small brain could understand, the differences between products a, b, c, d, e and probably f, was a relief.

It is the same when you are looking around, for example, for warehouse insurance. You can probably get a few “online quotes” but how do you know the differences. Print off all of the quotes, summaries and terms of business for each quote and not only do you have a lot of paper, it is just words and after a while it is a bit difficult to understand the differences. A broker can help you with this, and also try to get you the most competitive quote. Go on, give us a try, you might be surprised by how good a deal you can get.

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Wholesalers insurance – waste warranty

Tuesday, November 16th, 2010

If you have a wholesalers insurance policy, the chances are that it is not a bespoke policy, it is more than likely that an insurer has based your cover on a commercial combined policy.

Most insurers will have packages for shops, pubs, hotels, offices, restaurants and takeaways, to name but a few. Other businesses which do not tend to necessarily fall into one of these categories will be placed, or underwritten, via a commercial combined insurance policy. It really is a case of doing what it says on the tin, it combines the usual covers that you need for a particular trade.

In addition to combining the different types of cover, insurers will apply individual warranties and conditions to each policy. For a wholesaler, there will be, somewhere in the wording a waste warranty.

Drive round any industrial estate and you will see large wheelie bins and pallets everywhere. A waste warranty says that you must remove all rubbish from the premises, either daily or weekly.

The reason you should check your warranty is, because in the case of a fire, if it can be proven that waste was not removed, in accordance with the warranty, then you could have your claim repudiated. Why? Because you are essentially leaving, or storing, combustible materials in the premises which will add fuel to the fire. Without that waste being stored in the building, would the fire have been so bad? It is of course very difficult to prove, but it is something that you need to be aware of.

When we mentioned pallets earlier on, most insurers who undertake surveys will mention to us, as the business insurance broker, that the customer is storing pallets too close to the building. This can cause two problems. Firstly, there is of course the risk that there is a fire, arsonists can wander around the esate and pallets, with their numerous air holes and dry wood, are very easy to burn. Secondly, there is an issue with people using them as ladders to gain access to a building.

As with all insurance policies, you do need to check through the wording from start to finish and make sure that you comply with all conditions, terms and warranties that apply.

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Third party warehouse insurance – make sure you are not paying over the odds.

Wednesday, November 10th, 2010

If you are an internet retailer or wholesaler, you may have your stock stored in a third party fulfilment warehouse. As part of this deal, you may be paying a separate fee to them for warehouse insurance, in respect of your stock.

Many of these premises will charge you, automatically a cost per £1,000 of stock that you store. The amounts that they charge do not tend to differ too much, but if you are storing extremely theft attractive items such as MP3 players or other consumer electronics you may find that they charge you a higher rate than say, for pushchairs. They may have a scale of charges, but in our experience, the premiums they charge are way over what you could obtain from an independent business insurance broker. In addition, they are not providing you with public or products liability. It is just basic cover in case of fire, theft or other “physical loss” perils such as storm.

Whilst we cannot ever guarantee it, for most businesses that operate in this manner, with a turnover less than £100,000 we can usually provide a quote that covers the stock and the liabilities, for a similar price that you are paying for the stock.

The thing to remember is that they cannot force you to take out their own insurance cover. They are entitled to ask you to prove you have alternative cover in place. This is simply a case of us emailing you a standard “proof of cover” letter which, in turn, you can send to the fulfilment warehouse company.

Once they have this proof of cover, they can then stop charging you, what we feel, is too much for your cover. Why is it too much? Usually because there are many mouths to feed. Not only do the insurers get some of the premium but there will be a broker, or maybe two, involved in arranging the policy and the warehouse owner may have some kind of introductory fee. All these amounts add up to a premium that can be too high.

We need to make it clear that not in all cases are you paying too much. Just that in our experience, when customers speak to us about the costs, we feel that they are too high when compared to the open market prices available.

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