Danny Flowers, managing director of Motum Insurance Services, answers some of the questions more commonly asked about protecting a business.
AS COMMERCIAL insurance brokers, we often are forced to challenge the thought processes of business owners and provide them with advice that develops their understanding of the overall risks facing their business.
Building the right insurance package to protect a business comes down to understanding the business activities today and in the future, the aspirations of the business and the owners and ensuring we build a package that compliments this.
Let’s address some of the most common queries we receive.
What happens with my no claims bonus once I take a fleet policy?
Your no-claims bonus is surrendered to the fleet policy so cannot be used elsewhere. We continue to use your no-claims bonus for the first three years of being fleet-rated, after which point it no longer holds any relevance.
If you were to move back to private car insurance, some insurers will accept your no-claims bonus along with a confirmed claims experience to support your claims history.
I don’t need employers liability. Everyone is self-employed.
It is common within the trades industry for everyone to effectively be self-employed. However, this does not mean you do not need employers liability cover.
It is important to understand whether someone is a labour-only subcontractor or a bona fide subcontractor. The key is in the name: labour-only. While we will keep it fairly simple for now, all labour-only subcontractors are viewed as employees and therefore you need to have employers liability insurance.
I don’t need cyber insurance. We are too small for anyone to notice us.
Every business has a cyber risk. Criminals cast a wide net, using malware, ransomware and social engineering to attack and take advantage of weaknesses.
The reality of a cyber attack is that it could lead to reputational and financial damage, operational disruption, intellectual property theft and have legal and regulatory implications.
Cyber cover can start from as little as £50. With 63% of SMEs not covered adequately for cyber, it is something that we at Motum believe every business should be considering.
I own a limited company so no one can come after me as a director. I can just shut the business down.
Do you ever get home, sit down for dinner and spend time contemplating every decision you made that day in your role as a director or officer? With the law constantly changing and a director’s liability unlimited, it is a stressful position.
Legal challenges can come purely based on the decisions you have made, even if the claims are completely unfounded. Defending your position is expensive irrespective of the business size or the gravity of the decision.
Professional indemnity will only cover the business and not the directors. What if someone claims against you directly? Cyber Insurance will cover the business but, as a director, did you put adequate systems and controls in place to prevent or reduce the impact of a cyber attack?
If you close the business and it is deemed that you have not acted in the interest of the creditors, again, you could be liable. Management liability cover will protect your personal assets while providing you with the backing to defend a legal case.
I’ve insured my house for the amount I paid. That’s right, isn’t it?
80% of properties in the UK are underinsured, according to information supplied by Aviva. How does this happen?
The building sum insured of your property – ie, the amount you insure it for – is not only about the cost of building your home but also of clearing debris and of getting the site build-ready again. You also have to consider inflation, cost of labour, cost of materials and so on. As a solution, plenty of brokers can identify and inform you of underinsurance based on a large pool of data. A RICS valuation will also provide you with adequate information.
Failure to insure a property correctly often means that you will not be paid out at all until you prove you have the funds available to top up the underinsurance in order to complete the rebuild. Is it really worth the risk?
