Detailed on the following pages are certain important matters relating to insurance contracts in general which you should take in to account when reviewing your insurance requirements.
It is vital that you are aware of and adhere to these principles as they could have a material effect on your insurance. If you require any further explanation on any of the points mentioned please contact us at Kingsland Robart and Company.
Duty to Disclose Material Information
“Material Information” is information that could influence an Insurer in deciding whether a risk is acceptable and if so at what premiums, terms and conditions.
Failure to disclose all such information could result in the Policy being rendered void
Before Inception of Cover
All material information must be disclosed to Insurers to enable terms to be negotiated and cover arranged. This is not limited to answering specific questions that may be asked. Any changes which occur or come to light after a quotation has been given must also be notified to Insurers.
After Inception of Cover
The duty of disclosure is re-imposed when there are changes or variations in cover and when the risk is renewed or extended. In addition, changes which substantially increase the risk or relate to compliance with a warranty or condition in the Policy must be notified at once.
To ensure that cover is not prejudiced please refer to us if there is any doubt as to what information needs to be disclosed
Reasonable Care
Some of your policies carry reasonable care conditions e.g. Motor. This means that you must take reasonable care to prevent loss or damage. In the case of motor vehicles under no circumstances must vehicles be left unattended with keys in or on them.
Proposal Forms
Many Insurers still require completion of a proposal form which then forms the basis of the contract with them. It is important that you answer all questions in as much detail as possible paying particular attention to the declaration at the end of the form. If inaccurate or insufficient information is given it may entitle an Insurer to declare the policy void and repudiate any subsequent claim.
If you are in any doubt regarding the completion of any part of the form please contact us.
Warranties
Where a warranty applies, it is essential that this be strictly complied with as failure to do so could render the covers void.
Your Register may bring their existence to your attention but please refer to the Policy for their exact wording and ensure you fully understand the implications.
Claims
It is a condition of all insurance policies that prompt notification is made of any incident which might result in a claim. Failure to comply with this condition could prejudice your position should a claim actually be made.
Sums Insured
It is important that all sums insured under your policies are accurate in order to avoid the possibility of “Average” or underinsurance being applied in the event of a claim. Put simply, if you were to insure your property for, say £100,000 and the true replacement cost is £200,000 Insurers will consider you as a “co-insurer” for the difference and pay only 50% of any loss (however small).
If you are unsure as to the correct values of your property our advice is to overestimate rather than underestimate the sums insured until such time as you can make a more accurate assessment of the true values. Whilst we are able to discuss values with you we are not professional valuers. However we do have access to independent professionals who will undertake a detailed exercise for you for a pre-agreed fee
Special considerations when assessing your sums insured include:
Buildings The cost of reinstating your building(s) with new materials including due allowance for:
§ Architect’s, surveyor’s and consultant’s fees
§ Removal of debris costs
Plant, Machinery and all Contents (other than Stock)
Insurance cover for your Plant and Machinery is arranged on a reinstatement “new for old” basis (except where shown) which entitles you to replace any item lost or damaged by an insured peril with a brand new item, regardless of the age of the lost or damaged item.
However it is vital that the sum insured under your policy is adequate to replace all your Contents on a new for old basis to avoid the possibility of Average being applied in the event of loss
NB You can elect to insure some or all of your property on an “indemnity” or market value basis provided that:
§ such items can be and are clearly identified under the policy
§ you understand and appreciate that any claim for partial loss to the plant could involve you in a contribution towards its repair
Stock and Materials in Trade
Losses are generally settled based on the actual cost to you of such stock without any element of profit. Loss of Profit is usually insured separately - see note below.
However in certain circumstances, e.g. pre-sold stock awaiting delivery, Insurers may agree to settle on invoice value, subject to a negotiated policy wording prior to inception of the risk.
Business Interruption
Generally cover for loss of profit is arranged on the “difference” basis i.e. the difference between:
a. the sum of the Turnover and Closing Stock/Work in Progress
and
b. the sum of the Opening Stock/Work in Progress and the “Specified Working Expenses”
“Specified Working Expenses” are those expenses which vary directly with turnover (and would therefore cease or reduce in the event of interruption to your business) e.g. Purchases, Carriage, Packing and Freight and Bad Debts
When deciding on your sum insured you should make due allowance for future trends in your business over the ensuing 24 months and beyond
Indemnity Period
The standard policy incorporates a 12 month Indemnity Period, which may or may not be adequate for your purposes.
When assessing an Indemnity Period suitable for your needs you should ensure that it would be sufficient to cover the total period during which your business could be affected. This should be based on a “total loss” scenario and therefore make allowance for all factors affecting the business including:
§ any rebuilding work (including delays for Planning Applications as necessary)
§ the sourcing and replacement of machinery (complex machinery may take longer to replace)
§ the return to former sales levels and/or market share even after the physical assets have been replaced
Motor Insurance
Insurers are now taking a much tougher line when faced with non-disclosure of driving convictions and other related matters and it is not unknown for them to repudiate liability if a serious conviction or disability only comes to light at the time of a claim.
Please therefore bear the following in mind:
a. Before employing any person who is likely to drive a company vehicle, you must check that the individual holds a valid “clean” licence. If the check reveals any convictions these must be disclosed to Insurers prior to employing or allowing that individual to drive a company vehicle
b. Existing employees should be reminded on a regular basis to disclose any new convictions and their licences should be inspected at least once a year, ideally a month before the renewal date of your motor insurance. We recommend that a copy of each employee’s driving licence be kept for your own record purposes
c. If any employee who may drive a company vehicle has any physical disability, illness or medical condition that may affect his or her ability to drive you must ensure that the employee has disclosed the facts to the Licensing Authorities and obtained written acknowledgement of the disclosure from them.
Fourth EU Directive
Under the terms of the Directive you are now obliged to ensure that the Motor Insurance Database is updated with any changes to your vehicles.
This can be done either by advising us/your Insurers or through a secure Insurer website, depending on your current Insurer’s preferred procedure – details of which are advised to you at each renewal.
Kingsland Robart & Co, 51 High Street, Shrewsbury, Shropshire, SY1 1ST - Authorised and regulated by the Financial Services Authority