Robison & Co

Small Business

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Under-Insurance

Understanding and Preventing Under-Insurance

Under-insurance occurs when a policyholder’s insurance coverage is insufficient to meet their needs. This can result in a claim amount that exceeds the maximum payout the insurance company will cover. Consequently, the policyholder may face a shortfall, leading to significant financial losses for the organisation. To avoid this, it’s crucial to take proactive measures. Here are six effective ways to prevent under-insurance:

Regularly Value Business Assets Accurately

It’s essential to frequently assess the value of your business assets to ensure your insurance coverage remains adequate. While businesses can perform these valuations themselves, hiring a professional can provide a more precise assessment.

Provide the Correct Rebuilding Cost

When insuring your property, always provide the insurer with the cost of rebuilding it, not its market value or the original purchase price. The rebuilding cost ensures your coverage reflects the actual expense of restoring your property in case of damage.

Calculate and Report Actual Total Revenue

To ensure adequate coverage, calculate your actual total revenue and report this figure to your insurance company. Accurate revenue reporting helps the insurer assess potential risks associated with your operation and provide appropriate coverage.

Determine an Appropriate Indemnity Period

Select an indemnity period that allows your business sufficient time to recover from any incurred loss. An appropriate indemnity period ensures you have enough time to restore operations without financial strain.

Increase Sums Insured in Line with Inflation

Regularly adjust your sums insured to keep pace with inflation. This practice ensures that your coverage remains sufficient to meet rising costs over time.

Review and Update Your Policy Wording

Periodically review your policy wording to ensure it offers the broadest cover for your needs. Update the policy whenever there are significant changes in your business to maintain comprehensive protection.

 

By taking these steps, businesses can significantly reduce the risk of under-insurance and ensure they are adequately protected against potential financial losses. Regular evaluations, accurate reporting, and proactive adjustments to insurance policies are key to maintaining sufficient coverage and safeguarding your business’s financial stability.

 

To discuss a new policy, or current policy  please get in touch with us via one of the options below!

Book a call        01730 265500        Contact request form        hello@robison.co.uk

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Unoccupied Buildings due to lockdown

On Monday 4 January the UK Government announced a further national lockdown and we  felt it was important to remind our customers of the impact this situation has on property insurances and the support and guidance we/your insurers can offer in the management of unoccupied buildings during this challenging time.

We are in a slightly different situation to previous lockdowns in that insurers were providing blanket responses to properties that were forced to close without restrictions in cover. Whilst some Insurers are continuing to provide blanket cover, this time the reaction is less co-ordinated and will have to based on individual circumstances. 

All customers who have a property insurance element to their policy have a minimum (14, 30 or perhaps 60) day definition of unoccupancy/empty in their policy, If a building is unoccupied for in excess of the specified period in the policy, we would ask that customers notify us immediately so that we can discuss your individual circumstances and ensure you receive the right advice and wherever possible maintain full cover. Failure to advise us could mean important elements of your cover are automatically withdrawn, the last thing any of us need with us moving into the coldest part of the year with freezing conditions and adverse weather.

I would urge you to discuss your individual circumstances with your Account Executive.

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FCA TEST CASE – COVID-19 Losses – Supreme Court Decision announced today.

The Supreme Court judgment in the FCA Business Interruption Test Case was published today. The full judgment together with a copy of the FCA’s press release is available here.
 

In concert with our Network provider Marsh and specialist Law Firm Fenchurch Law, we are reviewing the content of the judgment in detail. However, the key message is that the Supreme Court substantially allowed the appeal of the FCA on behalf of policyholders and dismissed the appeal brought by insurers. Notably finding the following:

  • Notifiable Disease Clauses – while the Supreme Court took a different approach to the High Court, it confirmed that all the disease clauses before the Court were triggered;
  • Prevention of Access / Hybrid Clauses – cover under these clauses still faces challenges but may be triggered more readily. No requirement for a legislative step ordering closure and potential cover for loss of access to part of premises;
  • Trends Clauses – the Supreme Court was clear that trends clauses can only take into account factors wholly unrelated to COVID-19 and rejected the “wide area damage” arguments of insurers;
  • Orient Express – the Supreme Court determined that the Orient Express case was wrongly decided and that it should be overruled. This decision therefore has positive consequences for insureds beyond the scope of COVID-19 claims. 

Next steps
We expect to be able to issue a further communication next week, to provide more detail about the key findings in the judgment and we will let you have further details when we are able. Please speak with your Account Executive if you have any questions or concerns regaring the implications following this judgement.

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UK to Lift Second Coronavirus Lockdown

The UK’s second coronavirus lockdown will be lifted on 2nd December. Prime Minister Boris Johnson announced on Monday, 23rd November that a new set of restrictions will be implemented in place of extending the lockdown.

Johnson’s new COVID Winter Plan will include a number of stringent restrictions to limit the spread of COVID-19 and minimise the impact of the pandemic’s second wave. In addition to the new plan, the government plans to reactivate a three-tier system of restrictions in England that was implemented earlier this autumn before the start of the second lockdown.

While both new and familiar restrictions are on their way, Johnson also announced that certain regulations will be alleviated starting 2nd December, such as:

  • Non-essential retail businesses will be allowed to reopen in order to support the Christmas shopping season.
  • Gyms will be allowed to reopen to minimise winter weight gain.
  • Pubs and restaurants will no longer have to operate under a 10 p.m. curfew.
  • Areas identified as Tier 3 in terms of coronavirus-related risk levels will utilise a mass testing programme conducted by the Army.
  • A limited number of fans will be allowed to attend sporting events in areas identified as either Tier 1 or Tier 2.

In addition to these upcoming changes, government officials are also in the process of discussing a break around Christmas that would reduce pandemic-related restrictions. During this break, which could last up to five days, more households may be able to gather while celebrating the holiday.

Although some restrictions may be becoming less strict, it is important for people to be aware of local and regional rules. Starting 2nd December, a greater number of areas may be classified as Tier 2 and Tier 3, resulting in greater restrictions than such areas may have had prior to the second lockdown.

For updates on the government’s COVID Winter Plan, the proposed Christmas break and other information related to the coronavirus pandemic, contact us today

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10 COVID-19 related insurance tips for SME’s

Over the last few months, we have released a number of updates relating to the insurance implications of the COVID-19 pandemic. Now that we are back in Lockdown 2, I thought it timely to  bring an excellent summary to your attention that our industry body BIBA have released in conjunction with the CBI and the ABI. It’s a very concise and informative document which highlights 10 keys issues for anyone involved in running a business. I would encourage you to follow the link HERE. Please make contact with us if you need to discuss your own circumstances.