Throughout this period, we have been working with our insurers, our trade association, BIBA, our professional body, the CII, & the Society of Insurance Broking to bring our clients information which we hope will help you and your business. The below are summaries of certain issues. Please contact us to discuss your own concerns in more detail.
Business Interruption | Furloughed employees and reduced turnover | Change of business activities, change of use of premises or vehicles | Motor vehicles and SORNed vehicles | Home insurance | Home working | Payment deferment | Travel insurance | Under-insurance | Unoccupied property | Statutory plant inspections | Coronavirus Business Support Finder | Trade credit insurance | Fraud and crime | Management Liability/Directors and Officers | Cyber and E-Commerce | Group and Private Medical
Very few policies have the unspecified disease extension that would provide cover for losses resulting from the impact of this pandemic.
Insurers are starting to impose new exclusions on Covid-19 for new policies and at renewal. In large part, they say that these are tightening/clarifying exclusions that already existed and to make it clear that it was never their intention to cover pandemic exposures.
We have noticed (a very few) policy wordings where coverage is grey or silent and we are identifying those policies (and clients) so that we can present claims where we feel there are potential grounds for the policy to respond.
Furloughed employees and reduced turnover
We are asking insurers to rate furloughed employees as ‘clerical’ staff since they have been sent home. Clerical staff attract a lower rate of premium than manual workers. We are asking insurers to consider premium credits for Employers’ Liability policies to reflect the decreased exposure.
We have done the same where we can see that turnover is being significantly impacted and this should be reflected in Public/Products Liability covers and Professional Indemnity policies.
Individual insurers are still contemplating their own positions at the time of writing and there is no consensus yet in the market.
We have pointed out to insurers that they should now see a significant drop in claims frequency as there is less manual activity and third party exposure.
Please let us know if you have furloughed staff and what impact you currently anticipate on your turnover.
Change of business activities, change of use of premises or vehicles
Some businesses are undertaking work, such as, producing items for the NHS or undertaking voluntary work in their vehicles. This will generally be agreed by insurers without question. However, please discuss with us.
Vehicle security – you may have to park up vehicles due to a lack of demand or work. Ensure they are kept in secure compounds or yards wherever possible and that all security devices are fully operative so that your insurance is not invalidated.
If you have vehicles that will be laid-up for some time, it’s well worth considering registering them as being off the road (SORN) as most insurers will charge less premium or provide a credit to your next insurance premium. You will still benefit from cover for fire and theft.
Please let us know if you are SORNing vehicles.
Due to the coronavirus crisis, MOT certificates have been extended by six months. This applies to vehicles with certificates that were due to expire on or after March 30. Government MOT records should be automatically updated three days before the original expiry date. If this does not happen automatically, you must email your vehicle registration number and your MOT expiry date to firstname.lastname@example.org. Once your MOT certificate has been extended, you will be able to tax vehicle as normal. You can check if the MOT has been extended at https://www.gov.uk/check-mot-history.
It is usually a condition of motor insurance that motor vehicles; where the law states they must, should have a valid MOT and absence of such might cause problems in the event of a claim. Insurers have confirmed that they will deal with claims as long as vehicles remain roadworthy and motorists are not ignoring obvious safety issues.
We have pointed out to insurers that they should now see a significant drop in claims frequency as many fleets are temporarily off the road or undertaking lower mileages.
Many home insurers want to be notified so best to check with them if you are now working from home. This might be something to suggest to your employees.
Insurers are being flexible on commercial policies where staff are working from home and many are offering £5k limits for company computer equipment and other kit used at home during this period. Again, please check with us what the position is on your policy.
If you pay your premium via Premium Credit (PCL), they have agreed not to charge customers for changes to repayment dates or for rescheduling loans. The following offers are indicative, and each request will be considered on a case by case basis, once the first payment has cleared:
- Depending on business size and need, up to 2 months payment at 50%, or a one-month payment deferment
- Depending on the repayment profile, the shortfall will be paid by spreading across existing repayments or by additional payments within the policy term e.g. if the agreement is on a 10 month basis, there will be an extra payment in month 11
- Default fees waived whilst payment plans agreed
PCL customers should contact them at email@example.com or 0330 123 9717, quoting your PCL agreement number. My understanding is that they will discuss the various options with you to agree what works best for you within the confines of an annual insurance contract.
Most insurers have indicated that if existing annual travel policyholders have booked holidays beyond the expiry date of their current policies, they will be covered in respect of those future holidays. This will be done through the issuance of single trip policies covering these specific holidays. New and renewal of annual travel policies are likely to have a Covid-19 exclusion. Please let us know if you have any travel booked after the date of your policy renewal date.
We need to be careful that commercial/corporate policies do not exclude Coronavirus/Covid-19 cancellations and other claims. We will point out any new restrictions in cover.
Insurers are concerned that, for some businesses who are over-trading in the current environment, turnover and stock levels might be underestimated and that could lead to underinsurance. If this applies to you, please let us know so that we can adjust your cover.
Most insurers are being helpful with many increasing the unoccupied provision from 30 to 60 days (or longer). Beyond that they remain open to discussions on a case by case basis. Please let us know when your business premises become (or became) substantially unoccupied. We will work with insurers to stretch “normal” terms for you.
This applies equally to construction sites that have been temporarily closed because of Coronavirus.
Statutory plant inspections
Some insurers have not been able to schedule required inspection of critical equipment such as lifts, escalators and boilers because on the strain on resources of insurers’ engineers and the risk to them of entering large residential blocks. We understand that insurers are discussing the issue with the Health & Safety Executive and have requested latitude in circumstances where a certificate has temporarily expired – for example a 30-day automatic extension.
Coronavirus Business Support Finder
The Cabinet Office has published a tool for UK businesses to ascertain what support is available to them including loans, tax relief and cash grants. Use the new business support finder to help your business to determine what support is available to you.
The basic premise of insurance is to transfer risk to insurers rather than carry the financial burden on your own business. We understand that now is not the time to easily spend more money on your business but there are changes to the vulnerabilities which might mean that increasing your spend is a prudent measure to protect your firm. Please contact us to discuss your own concerns in more detail.
Trade Credit insurance
One of the issues that clients are generally under-informed about is the availability of trade credit insurance to give protection against bad debts.
Particularly in the current economic environment, your customers’ ability and/or willingness to pay might change rapidly.
Trade credit insurance is still (at least for the time being), widely available and provides a ‘back stop’ that will ensure that the firm receives payment. Cover is available not only for the failure of a creditor but also from disinclination to pay and, that being the case, insurers will settle a claim within, say, 120 days of the invoice becoming due for payment and then take over the debt. Having said the above, the debt is never insured to 100%. If the insurer recovers the whole debt, they will also return a proportion of the uninsured part to the client while keeping some for their costs and risk.
Fraud and Crime
Attempts to defraud businesses are ever-present, but businesses may be more susceptible to fraud with the current restrictions of movement. Under normal operating conditions, you may have robust and resilient techniques to mitigate losses – such as requiring dual signatories on cheques or online payments.
Businesses may become more reliant upon email or telephone requests for payment which can create an increased risk of fraud.
So, we suggest that you review your internal procedures for money handling and transactions and also consider your crime insurance protection. You may have limited theft by employee cover, but this should be reviewed against the current risk of losses occurring.
Management Liability/Directors and Officers
As a management team, you are responsible to your various stakeholders to fulfil your roles with expertise and insight. An allegation of a failure to do this may result in legal defence costs as well as potential awards against you and the business. Allegations may come from within your business as well as outside, so it is a vital area of business protection to check that you have it.
Given the decisions we are all currently making have a particular potential impact on the safety of employees and the continuity of your business, a comprehensive Management Liability/D&O policy is essential. Speak to us about checking that the limit of indemnity is adequate for your business. Your business and its risk may have grown, and the cover not increased in the meantime.
Cyber and E-Commerce
Businesses that are relying ever-more heavily on their website and IT connectivity should consider the implication of a denial of access event, whether this might be a denial of service attack, or cyber damage.
Cyber insurance can include a business interruption extension because standard business interruption cover under a Commercial Combined policy will only respond to losses to income as a result of physical damage, and not following a cyber-attack.
If you have no cyber insurance in place, ask us to obtain quotations for you and we will ensure that your cyber insurance includes business interruption extension.
Group and Private Medical
The Government has announced an agreement between the NHS and private facilities which will see them reallocate much of their national capacity to support the NHS and help to meet the unprecedented demand for clinical care anticipated over the coming weeks and months. Cover remains unaffected other than it might take longer than usual to access treatment.
You will be able to continue access the majority of other services and benefits (subject to your particular policy coverage), including:
- Virtual consultations
- Mental health and stress counselling support helplines
- NHS cash benefit if your treatment is provided by the NHS
- Digital GP
Let us know if you feel that there is any other aspect of your insurance provision that we might help with through this challenging period.
Sending our very best wishes to you, your family and your business.
Please Contact Us to discuss your own concerns in more detail.