Personal Insurance
What is the dirty little secret of Insurance?
There are hidden clauses that loom large in policy documents and some are more sinister than others. Here I explain what the secret is, why it is dirty and how it’s still a secret.
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What is insurance companies dirty little secret?
The insurance market has a reputation of escaping from legal contracts using small print.
When businesses have a dispute they often seek legal recourse. The complainant will sometimes have insurance to cover such disputes. They ask their insurer to cover the cost of taking action yet policies prevent insurance buyers from taking action against insurance companies. Not much help if an insurance company has refused to honour the policy they issued.
Insurers do not make this clear. It’s difficult enough when commercial disputes arise, it’s galling to find that you have been given a false impression by the people you had invested in. Insurers paying claims want to reduce the most obvious or exclude them. It’s unfair when the exclusion prevents you taking action against a supplier that has obviously got something wrong – as is often the case when claims are badly handled. But for insurance companies to close ranks in this manner, that’s pretty low. Whatever their reasons.
Why it is dirty?
Because it’s industry wide, it’s tantamount to a cartel. Have all insurers secretly agreed that they will support claims against any industry except their own? If not, why hasn’t an entrepreneurial insurer stuck their head above the parapet and issued a policy that covers taking such an action?
Insurance disputes are common and it’s not always the broker that makes a mistake. Insurers are often culpable yet it costs almost £20,000 to take action against them. That is bad for UK business. Of course, it could be down to the fact that the insurance actuaries have worked out that insurers nearly always win cases. I suspect this is because complainants often run out of money to fund their legal case. If I’m right the figures will always be skewed.
Why it’s a secret?
I doubt if insurance companies place this exclusion at the back of their policies by accident. It’s not front and centre as you would expect such a sweeping exclusion to be.
There are other secrets in policies that are difficult to unearth and comprehend. Yet the dirty little secret of not allowing your client’s to take action against your competition is the most sinister show stopper.
Wrap up: Insurance companies do not pay claims when the insurance contract between them and their policyholder has been breached. If they refuse to pay a seemingly valid claim policyholders need to dig deep to ensure they get what is due to them.
Top Tip: Spend time assessing the key risk to your business and make sure you understand your insurance policies which are legally binding contracts. Make sure that important contracts and agreements are not excluded from your policies.
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See our top tips section for simple ways to help yourself today.
Have you got All Risks insurance?
The insurance definition of unattended items is a tricky one. Believe it or not this case history was made in the 1960′s when a sales rep left his car in a layby on A road. Then watched with disbelief as his car was driven off andhis samples were stolen. The judge ruled the items were unattended and not insured; are the same judges making the rules today?
The rule of thumb is whether or not you are close enough to the items to affect the outcome of a theft or other loss. If you don’t notice an item disappearing, cannot give chase or fail to intervene when an incident is occurring your policy may not pay out. Examples are laptops left in the luggage rack of a train, samples or equipment left in a hotel room, jewellery or cameras put in luggage kept in the hold, anything left in a vehicle or unlocked building.
Insurers are not likely to pay out if you cannot prove otherwise. I heard of a car boot being broken into at an airport and £7,500 luggage being stolen. Fair enough they were high rollers yet only £750 was offered in settlement. The original 1960′s case mentioned above followed the theft of diamonds left in the glove box of a car. They car was left for less than a minute. The diamonds were gone. The claim was declined.
Not all cases are this clear cut. As evidenced when sneak thieves rummage through bags on trains or at busy train stations. In theory, the owner was close enough to prevent the loss – yet they didn’t. They probably didn’t notice their property disappearing. Would you?
Top Tips: Always check the definition of unattended items in any policy covering items away from your premises. Interpret it in the worst case possible and keep a tight rein on anything you don’t want to lose. And check which policy you should claim from, your adviser will help you make the best choice. Visit our top tios page for more free information.
See our top tips section for simple ways to help yourself today.
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What happens if your neighbour has a fire that affects your business or your home?
Is your business or home close enough to be affected by problems next door? Have you assumed that you will be covered by your neighbours insurance? If you do, you may get a nasty shock, as insurance works best when you cover yourself. Especially if your neighbour assumed nothing would happen to them and decided not to cover themselves. Businesses in central London had to evacuate their premises recently for exactly that reason.
Click here for a recent story showing what happened.
You can arrange for your insurance to pay for income you lose or alternative premises yet only if you have asked for that type of cover before the problem begins. Don’t rely on the features of the policy that was sold to you. There are lots of terms, conditions and exclusions that can trip you up if you’re not aware of them.
In order to arrange this cover your adviser would have helped you calculate how much cover you need to hire alternative premises and equipment, worked out how long you want you might need temporary premises and totalled the cost of relocating everything essential to the new address. This is also true if you work from home, speaking of which – here’s an unrelated yet handy risk assessment for those that do.
So what can you do today to ensure you’re covered? Call your adviser and ask “how much cover have I got if my premises are out of action, when does the cover kick in and how long does it last?” If the answers seem wishy washy, request a reply by email.
Top Tip: You probably don’t have the time to develop a business continuity document – even though it could be as small as one A4 page. So keep a list of equipment that is critical to your business off site so you don’t have to rely on your memory. Remember what happened on “snow day” and focus on what didn’t work in your business that day. They’re probably your weak points.
See our top tips section for simple ways to help yourself today.
Health & Safety
Discover how to help your business before your neighbours suffer a catastrophe
Did you know insurance claims don’t always get paid when health and safety investigations are underway? There are four companies being prosecuted for H&S failures following the Buncefield fire of 2005. Have their claims for loss of profit and damage settled quickly and swiftly? Imagine the neighbouring businesses had assumed that they didn’t need to arrange their own cover because the site was “bound to have insurance”. A lot of people I’ve helped over the years originally thought they didn’t need insurance for that reason.
At the very least it will take ages for the case to be heard and a successful prosecution could lead to the insurance companies recovering their losses from the companies concerned. I expect that this case will be a watershed much as the Piper Alpha disaster of distant memory.
It is common for health & safety to be maligned yet the small concerns that businesses feel need little attention are often the areas that lead to bigger problems. Health & Safety is about having a robust system for identifying hazards and reducing their impact. If every business did that there would be no need for the “sledgehammer to crack a nut” approach that stifles common sense.
So ask yourself, is your business safe enough to work in? Is it safe enough for your child to work in? If you hesitate to say yes you may not have done all that is reasonable. And if you haven’t done what’s reasonable you’re probably not complying with legislation. And your insurance is dependent on that.
Top tip: Visit the HSE website and search for what you need.
See our top tips section for simple ways to help yourself today.
Insurance Myths – Part 4
To claim or not to claim
I’m often told that businesses have been advised not to make insurance claims because premiums will go up. This is certainly true in some cases yet I feel that analysing trends is the most appropriate way to work out if an incident will lead to a premium increase.
Insurance companies want to make profits. If you have been with an insurance company for 3 years and made two small claims you are still profitable. If the claims were for similar reasons the insurance company would rather nip the trend in the bud than increase premium. Small incidents can lead to larger losses if lessons are not learned.
There are complicated calculations to be done by the underwriters who work for insurance companies because premiums are sometimes broken into sections. If a series of claims are for flood, that part of the premium may have moved into the red and an adjustment can be made to the rate or the excess.
What’s best for both parties is to eradicate the incidents so organisations that are proactive will secure the most competitive rates for the long term. Premium stability is the mark of good rapport between customer, adviser and insurer.
A new insurance company means new policies, terms, conditions, exclusions and warranties. Chopping and changing to improve premiums can sometimes mean your new insurance company takes a hit in the first year. Terms are likely to deteriorate at renewal.
TOP TIP: Discuss every incident especially “near misses” with your adviser. They may have experience of risk prevention strategies which can prevent recurrence. These can prevent minor problems leading to preventable losses which are usually followed by increased costs.
See our top tips section for simple ways to help yourself today
Insurance Myths – Part 3
Here’s some handy tips to combat workplace stress
Not all employers’ liability policies cover all types of stress claims because stress is not an illness or an injury.
Stress is a modern buzzword for allsorts and you probably have a very simple way of helping anybody in your organisation that might be suffering but you might not know about it. Part of health and safety relates to identifying and addressing stress and insurers know that the cost of looking after employees is significantly reduced if proactive assistance is provided. So they give you help lines, usually for free (some even have free phone lines).
All you need to do is create a plan to identify those that are at risk and enforce it, here’s a handy guide http://www.hse.gov.uk/stress/standards/downloads.htm. Provide information and advice to employees, including the help lines, keep a record and plan to review your procedures at least annually. I’m happy to help guide you to the appropriate adviser.
TOP TIP: The help lines are confidential and numbers can be placed on notice boards, in company handbooks or handed to those with symptoms of stress, definitely in private.
