Professional advisers are not always protected by their insurance

Want to know why some indemnity insurance claims are declined? I have two examples of claims being declined, one more extreme than the other, yet both prove small errors can prove costly. And I’m going to tell you why they were declined and how to avoid it happening.

The first is the most recent, only a few months ago an insurance company refused to cover a claim for a company that was being sued for £47,000. The claim related to an incident that occurred in July 2005 when they had translated a document (allegedly incorrectly) yet it would have been covered if the insurance company had been made aware of it earlier.

The incident was first reported to the business in May 2005 and the complaint wasn’t disclosed to the insurance company. The complaint may have been the reason the owner of the business sought cover in the first place. This happens quite often. Not telling the insurance company what it needs to know is an easy mistake to make and can be avoided if insurance suppliers ask the right questions when cover is requested. Alternatively, the business owner should study all the documentation including the policy wording before they agree that the cover is suitable.

The worst case of an indemnity claim being declined is quite complex. It proves timing is critical when claims are reported. Some years ago a large PR company were contracted to build mobile facilities for a large entertainment company that wanted to provide entertainment road shows at large events.

HGV’s were to be adapted and turned into “play zones” where people could interact with new products. The PR Company won the contract because they proposed to turn Lorries into fully functioning interactive units within 30 minutes – using 4 men. You might have seen Jamie Oliver cooking in one of these contraptions in the TV adverts for Sainsbury’s.

In actual fact it took twice as long and twice as much labour to convert these monstrosities. Costs escalated which annoyed the client somewhat. They made a claim against the PR Company for reimbursement of the cost of hiring the extra labour, not just those that assembled the units. There were additional extra driver costs too.

The claim was for over £1,000,000 – count the zeros – and was for negligence in advice from the PR Company which lead to a financial loss for the client. The client couldn’t change their plans because this was a major part of their product launches for that year.

The claim was refused by insurers because the complaint had not been reported early enough. The client had made a fatal error. The cover was arranged on a Monday and the application form was signed on the following Friday. The complaint was first reported by the client on the intervening Wednesday and when this came to light the claim was refused on the grounds that they had breached the contract with the insurance company.

The application form stated very clearly that it is the client’s responsibility to tell the insurance company about everything that may affect their judgment of a risk at the earliest possible stage. They didn’t declare the complaint and the insurance company refused to pay. 

The PR Company went bust. They were well renowned and had a great track record yet they could not fund the loss.

Solicitors that work for insurance companies are asked to ensure claimants have met the conditions of the insurance contract. This is an example of how badly things can go wrong if the terms and conditions of insurance contracts are not explained to policyholders. If only they had told the insurance company when they first heard of the problem the claim would have been settled.

It is never a good idea to keep things from an insurance company however insignificant the information may seem. After all, they hold the purse strings and you don’t want to have to argue with them when a client is asking you to reimburse their loss or your income has been affected by an unforeseen incident.

Trying to argue with an insurance company when they have the law on their side is a costly business – I understand it costs something like £3,000 for a solicitor to review an insurance claim file and £17,000 to issue proceedings. Legal Expenses insurance policies usually exclude insurance disputes – well they would wouldn’t they.

Top Tip: Tell the insurance company everything, especially the “bad” stuff. This includes incidents that could lead to claims, complaints, financial problems, etc. The worst case scenario is that you might have to pay extra premium. If you don’t disclose everything you may find that your insurance will not work when you most need it.

See our top tips section for simple ways to help yourself today.

Related posts:

1. Accountants insurance is changing
2. Insurers tighten their belts on business claims
3. Insurance Myths – Part 4

Your network can help you keep clients as well as find new ones

Here’s a simple way to add value to your product or service.

From time to time your clients will reach the limit of your product or service. With a good sales and marketing process you will have already set the parameters of where those lines are drawn. However, you can add value if you have worked out who can help your clients where you can’t. Read on for examples.

Many of my insurance clients require health and safety planning to ensure their insurance company pays out when they want it to and defends them when they don’t. Building relationships with the right companies ensures you can recommend the right person for each situation. Knowing who to refer helps clients save time. They don’t have to search.

Another example is temporary premises when clients need them. Building relationships here ensures there are plenty of providers I can trust to relocate my clients quickly and easily when the need arises. This solves their problem and increases your value.

Furthermore, in the networking business we are often asked for advice regarding online networking, which networking group to join or how to sell at a profit once the connections are made. Knowing people that provide these specific services means we can refer each other when our specialism is required.

How can you do this for yourself? Work out where your service begins and ends and find people who provide services that lead to and from you. You can do that by asking your clients who it was that told them about you and then ask what’s next on their do to list. You can do this before, during or after they have become your client.

When you contact possible strategic partners in your network ensure you tell them the benefit to them of working with you. Helping your clients and their clients by adding value is the simplest way to put it.

Visit http://beyondnetworking.co.uk/ for further information about business networking results.

See our top tips section for simple ways to help yourself today.

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1. Want to secure cashflow despite bad luck?
2. Health & Safety Inspections – coming soon?
3. Solicitors frustrated by broker tactics

On the spot fines following these inspections have been increased to £20,000. Find out if your business is at risk and review our 7 free top tips on Health & Safety.

There are three reasons why you may hear from the health & safety “police”. All of them are beyond your control.

1. Someone disgruntled with an axe to grind
2. Incident or Accident
3. Spot check

 The first is very rare and relates to employees or ex-employees, competitors, neighbours or just about anyone else that isn’t a fan. Perhaps your partner if you’re a workaholic.

Number 2 speaks for itself yet it would have to be something serious. You may be responsible for reporting it to the authorities yourself because of regulations such as Riddor protocols (click here for a simple guide to RIDDOR from the health & safety executive). Or the emergency services or healthcare professionals may report to the local authorities.

Spot checks are unlikely yet I was introduced to a company last year that had been inspected on a spot check and given 7 days to attend to the inspectors concerns about asbestos. They would have been closed down if they did not. It was their bank manager that asked me to help. He had his client’s best interests at heart and asked me to find someone to handle this ASAP. The next day my contact visited the client and solved his problem.

Apart from these three reasons there is also the law, the recently increased fines, the hassle of tribunals or courts and evidence that businesses with robust health and safety plans make more profit.

See our top tips section for simple ways to help yourself today.

Related posts:

1. Health & Safety
2. Insurance Myths – Part 3
3. Want to secure cashflow despite bad luck?

I recently read an article in a newsletter from marketing expert Dave Croydon, Hilltop Consultancy. David was voicing his concern that automated telephone systems were of little benefit to customers, going as far as to call them a “customer disservice”.

The article mentioned that we wouldn’t accept it from the emergency services yet we’re already having to. My Mum broke her ankle last year and called me. Being made of stronger stuff than some of the celebrity icons of today, Mum didn’t want to bother the Ambulance service until she was sure it was broken. It was and I dialled the famous three digits, something we all dread.

How annoying to be put on hold by an automated system that informed me I was in a queue, at 9am on a Thursday morning.  I was very, very annoyed yet I didn’t want Mum to be any more concerned than she already was. Realising a broken ankle meant less amenity than usual was a kick in the teeth for a 67 year old, I gritted my teeth and bit my tongue.

Thankfully, after my call as answered by a human the paramedic turned up on a bicycle within 3 minutes. This shows what can be achieved with technology when it’s entirely focused on results for the customer.

Whilst at the hospital, pain killers, X-rays and a cast were in order, and this gave me time to think on the situation. Apart from the value of living close to my Mum, I concluded that these automated systems can only be successful when you have a captive market – like the NHS. Whatever service you choose, if you don’t like the system you find another option. Here’s a link to a petition to get these numbers out of the NHS.

Did anyone ever say that they wanted to be charged not to speak to the person that could answer their query? It’s even more expensive if using a mobile. At this stage I should tell you about “say no to 0870“, a website that gives you the real number yet will not get you past the systems. I dislike calling these numbers and will select suppliers accordingly. My bank will be the first after a series of unanswered calls which I see as withdrawals from my personal time bank.

So what can you do to improve the service you offer? First things first, ask your customers what they would prefer. If they ask for an automated system, go for it. If not, enthuse those that work for you or record a new voicemail or message that gives callers the option to leave a message detailing when they want to hear from you as well as the nature of their call with their name and number. Or if you want to impress and have £35 per week in your marketing budget arrange for the phone to be answered by a human being by investing in an answering service. They will answer the call, ask when the call should be returned and send you the details by email or text. Calling back at a random time doesn’t make you efficient so call back when it’s good for them – it will save both of you time.

For me, these services are not there to give the impression you have a swanky office yet they are a great way of greeting your customers when you can’t.  They simply advise the caller that you’re busy and will call back at a time convenient to them, as long as it’s reasonable, or give them the opportunity to reach you direct on another number, perhaps your mobile.

It’s my belief that automated systems are not good for the customer as they don’t provide a service. The only time they are useful is when the offer at the end of the line is worth the wait. Orderly Q operates a system that gives the caller reliable information on how quickly the call will be answered and the opportunity to leave a message requesting a call back – at a pre-determined time. The only time the other systems are acceptable is if they provide information or are able to signpost unimportant services out of hours.

Top Tip: At all other times it’s best to have the human touch and provide the personal service that you want to.

Related posts:

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2. Discover how your business network can help your clients
3. Insurance Myths – Part 4