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Accountants insurance is changing
Accountants indemnity changes 1st September
I thought you might be interested to hear about the new rules for accountant’s professional indemnity. Here I explain why it’s important to make an early report of claim circumstances, where problems with timing could occur plus a clear definition of what should be reported.
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Why should I report a minor concern?
Some policyholders believe that premiums go up if they report scenarios that are not really claims. If they don’t report a “circumstance” it proves to be a false economy. When the rules change it’s even easier to make a costly late notification.
Claims don’t happen often yet the early warning signs are common. Questioning fees, complaints about service and a lack of communication are typical indicators that a client or third party may become litigious. Especially if they don’t get their own way.
Have the new ICAEW rules made it clearer?
The new wording applies to cover effected on or after 1st September 2010 and makes it clear that claims can and will be declined if “circumstances” are not reported before the expiry of a policy. The intention is to ensure that insurance companies are aware of possible claims before the policy expires.
There is no longer a wishy washy wording – previously insurers refused claims notified later than they would like. This was despite the policy being on a “claims made” basis meaning claims made after the expiry would be covered if the work was completed during the period of cover. The terms of notification were not clear.
Now, possible claim circumstances not reported within the policy period will not be covered. Period.
What is a circumstance?
Definitions in policy wordings can be subtly altered without the policyholder noticing. Insurance contracts are full of detail. A “circumstance” is anything likely to affect the underwriters view of the risk. That doesn’t mean all complaints should be reported.
It’s ridiculous to report all complaints so ask your insurance supplier to interpret what is termed reasonable by your insurance company. There is no need for the new rule to result in more red tape. The fact that I’m writing about it means it probably will at the change is embedded into the policy wordings. That is not the intention, it’s just the devil is in the policy detail. We all want claims settled promptly and correctly.
Wrap up: Attempts to make policies clearer add to confusion. Indemnity policies have strict timescales for reporting claims or circumstances. Guidance on what a circumstance is should be sought before a policy expires, ie. before the renewal date.
Top Tip: Uncertainty is not good for anyone. Ask your insurance supplier for clarification of expiry dates, notification deadlines and clarify what “circumstances” are real in your World.
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Business Insurance has a hidden weakness – does your policy protect you properly?
Insurance claim departments are taking a hard nosed approach – make sure you’re covered
I recently heard about three businesses who have been robbed of £250,000 assets and their company insurance is not paying out. Today, I heard about another case of a business getting caught out and insurers used terrible judgement to decline the insurance claim. I am trying to use the information superhighway to show you how to ensure this doesn’t happen to you or people you know that run businesses.
The scene of the crime
Criminals have been climbing into manholes and cutting telephone lines at targeted premises. This triggers the alarm and Police and a member of staff attend the premises. There’s absolutely no evidence of a break-in so the Police and staff withdraw. After everyone has left the premises are then broken into yet the alarm doesn’t sound because the lines have already been Read the rest of this entry
Can contractors insurance enhance a reputation?
Here’s a brief explanation of how accidents can happen, the benefits of quality service and how reputations can be enhanced when bad luck turns up.
There seem to be a lot of people damaging windows in Bond Street these days. Not all of them are sinister. Here’s a true story about what can be done to prevent accidents turning into disasters.
A client had the misfortune of damaging the window of a jeweller on Bond Street whilst he was working there. The windows are supposed to be “bullet proof” yet it didn’t stop a sparky’s screwdriver – he was working inside when it happened.
This electrical contractor has a great reputation. Often working at high class restaurants and retail outlets in airports, they have always been careful to ensure they have adequate cover. And they insist we arrange insurance with companies that are willing to help as soon as a claim occurs.
This happened on a Sunday and a call reassured the jeweller that they had adequate insurance and they could order an immediate replacement window because the damage would be covered without admitting legal liability of course. They were able to do this because they understood the claim process and knew who to call to check they had the right cover. How many people can say that?
The new window was installed without delay yet we were asked to intervene when the cost of the glass (£18,000 from Germany) increased because the pound had weakened between the time the order was made and the settlement cheque delivered. We contacted the loss adjuster and they arranged for the increased settlement. And the insurance company benefitted from their willingness to see reason.
The end result was a win for everyone. The contractor had increased his credibility, the jeweller is certain they used the right contractor, the insurance company paid the claim and secured the client’s business for years to come. The insurance company also learned to settle claims promptly or suffer the consequences of currency fluctuations.
These are not the only challenges contractors face, click here for an article highlighting how subcontractors can avoid problems with HMRC.
Top Tip: Always ensure you know your claim process. It’s extra prudent to try the claim reporting number and enquire about the claim process before you buy. And get your broker to check the insurance of anyone working on your premises – you don’t want to suffer a dent to your finances because they haven’t insured themselves properly.
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 2
Employers often ask why insurance companies pay the wrong employee claims.
The answer may be that it’s cost effective. Why incur court costs when you know the claimant will accept less than the cost of mounting a defence? The other answer is that sometimes they have no choice, especially when health and safety planning has been botched or ignored.
There are three questions that accident and injury lawyers will ask all claimants:
- Did your employer have a health and safety policy?
- When did you last receive a copy?
- Have you signed your training record?
If the answer to all 3 is “no” the employer is in breach of a central plank of health and safety legislation. A defence is difficult to mount. Companies that specialise in mounting “no win – no fee” claims realise it’s prudent to keep claims under certain thresholds because they know it is not economical for insurers to incur legal costs attempting to defend. And claims will be paid when they shouldn’t be.
Some insurers seek to recover defence costs from businesses that have shown a flagrant disregard for health & safety. If they cannot repay the insurer the rest of us receive inflated premiums.
The last time I looked, up to 40% of UK employers’ liability premiums were spent defending claims. Premiums would increase further if insurers started fighting losing battles.
So how do we avoid funding these sometimes ill gotten gains? A great way to reduce insurance premiums now and in the future is to embrace health and safety planning. It’s not as complicated as it’s made out to be, common sense is the order of the day. If businesses had effective, up to date health and safety policies, these claims could be declined meaning reduced costs for insurers and lower premiums for all – except those sectors that collectively ignore such plans.
TOP TOP: If you have a governing body or trade association let them know they can help you cut costs by improving standards in your sector. I’m happy to help you work out how to tackle your liabilities.
P.S. Have a peek at some of the myths http://www.hse.gov.uk/myth/index.htm the HSE have exploded.
