Renewing Your Insurance Policy
When renewing your commercial insurance policy, there are a number of things you need to be aware of. Whilst your broker (or insurer if you are a direct customer) should make you aware of these points, its safe to say this is not always the case. As a result we have compiled the following to help and assist you:
Declared value
Declared Value of a property at policy inception must represent the full reinstatement value of the property (Rebuild cost of a property including all fees and debris removal).
Wages and turnover estimates
Some brokers have been known to obtain quotes on the basis of lower wages and turnover in order to obtain a better quotation. This can be a material non-disclosure and may result in a claim being declined. It can also mean a large additional premium at the end of the period from the declaration that you are obliged to provide to the insurers.
Policy warranties and conditions
It is very important to have all the warranties and conditions fully agreed and explained at the commencement of the cover period. Failure to meet these in full will result in a claim being declined by the insurer.
Director’s involvement in previous companies or businesses
If any Director has been on the board of a company that has been wound up or liquidated must declare this fact to the insurers. It should not effect the current insurance arrangement but could result in a declinature on the basis of a non-disclosure. It is also the correct company name is recorded and any trading style. If you have any associated companies you should name these on the policy.
Business interruption or Consequential loss
Many companies fail to have their claims paid in full due to underinsurance and a lack of understanding on the level of cover and indemnity period required. Under insurance can result in losses of many thousands or even millions following a major loss. Gross profit must include wages an be estimated on the figure which the company expects to achieve at the end of the indemnity period. In order to make sure cover is adequate the policy should be written on a declaration basis which gives a 33.3% increase in the sum insured at no extra cost and the policy is not subject to average. The indemnity period must be established on the maximum period that is required to return the business to the level of gross profit had the claim not occurred.
Long tail Employers Liability claims
The commitment of an insurer is to deal with claims up to 40 years. An employer must be able to identify the Employers Liability insurers and hold their policy number back to the start of the business or 40 years whichever is the shorter. If you take over a business as a going concern, as part of the due diligence, the previous insurance policies must be identified. If an insurer is unknown or has gone out of business this could result in a large liability on the company. If a long tail claim arises such as industrial injury or illness or disease arises and you are unable to place this claim against an insurer then you company is liable. Your professional adviser should have advised you of this before buying a business. This is the reason Insurers state that you have to retain your liability certificate for 40 years.
Taking out insurance cover
When you insure your business it is not always advisable to select the lowest premium as cover may be restricted or be inadequate and your claim may not be paid. You must know exactly what you are insured for and any warranties or conditions that apply to the policy.
The foregoing is to act as a warning as some cover and policies are not worth the paper they are printed on and you would be self insuring.
If you would like to discuss the above or if you have a commercial insurance policy renewal approaching and you would like some advice or a quotation please contact us on 01707 883377 or alternatively email us on info@bromwall.com or visit our commercial combined page here
Image: FreeDigitalPhotos.netTags: a, broker, commercial, Insurance Renewal, renewing
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