PolicyBee news and risk advice http://www.policybee.co.uk/blog Articles and posts on professional indemnity insurance, small business news and risk management Wed, 23 Jul 2014 11:52:30 +0000 en-US hourly 1 http://wordpress.org/?v=3.9.1 How to get your property claim paid in full http://www.policybee.co.uk/blog/9222/property-insurance-average http://www.policybee.co.uk/blog/9222/property-insurance-average#comments Mon, 21 Jul 2014 09:00:55 +0000 http://www.policybee.co.uk/blog/?p=9222 spare change on wood desk

Falling short 

We recently talked about a client who underinsured his photography equipment. And then had a claim.

Although he had around £30,000 worth of portable equipment (cameras, lenses, tripods etc) in total, he only took £5,000 worth of it … Read more....

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spare change on wood desk

Falling short 

We recently talked about a client who underinsured his photography equipment. And then had a claim.

Although he had around £30,000 worth of portable equipment (cameras, lenses, tripods etc) in total, he only took £5,000 worth of it out at any one time. So he made that his level of cover.

When he tried to claim for £5,000 worth of stolen equipment, he had a bit of a problem. Due to a thing called the ‘average rule’, our client’s insurer refused to pay out the full value of his claim because, in their eyes, he was underinsured.

Our client didn’t know he was doing anything wrong. Since the maximum he’d ever need to claim for was £5,000, he didn’t see why he should pay extra for more cover. Unsurprisingly, he felt the whole thing was a little unfair considering he wasn’t deliberately flouting the rules.

Read more about his claim here.

What’s the ‘average rule’? 

‘Average rule’ is the calculation an insurer uses to pay a claim where the level of cover is less than the value of property insured. 

It’s actually a pretty simple equation, and it looks like this:

Payout = Claim \times \frac {Sum\ Insured} {Current\ Value} \!

This means, if you’ve only insured a proportion of what you own, your insurer will pay claims by the same proportion. To put it another way, your insurer reduces claims payments by the amount you’re underinsured.

Depending on how much extra kit you haven’t insured, that could have quite a big impact on your business.

Give us an example 

Let’s say you have £15,000 worth of equipment cover. When you took out the policy, this was more than enough. You’ve since bought some more stuff, but haven’t increased your level of insurance. Now, the cost of all your kit is closer to £20,000.

After a break in at your office, you try to claim for the full £15,000. However, after a quick inventory check, your insurer realises you’re underinsured by £5,000; that’s 25% of the actual sum you should be insured for.

Since you’ve only covered 75% of your property, your insurer will only pay 75% of the amount you want to claim for. In this situation, that’s just £11,250.

Even if your claim isn’t as much as your level of cover, your insurer will still reduce the claim payment by the amount you’re underinsured.

Why do insurers do this? 

Insurers want to know about everything they might be covering. That includes things you don’t think you’d replace if something happened to them.

The main reason insurers apply the ‘average rule’ is to deter people from deliberately underinsuring in an attempt to save money. If all their customers did this, insurance companies would struggle to cover all clients’ claims.

As far as they’re concerned, they’re being asked to take on the risk of covering everything, without getting the necessary premium. That’s the kind of maths insurers don’t like .

What should I do? 

The one infallible rule is always be honest. Tot up everything you own and declare its total value to your insurer. Keep a record or inventory of everything; updating it as and when you add equipment (and not forgetting to tell your insurer, of course).

Have a look at your policy wording too because insurers’ rules differ.

For example, one insurer we work with has this in their wording:

If, at the time of damage, the amount insured is less than 85% of the total value of the contents, the amount we pay will be reduced in the same proportion as the under insurance.”

This allows some room for those who’ve underinsured accidently.

If you have any doubts, it’s always best to contact your broker. They’ll you exactly what your policy says about underinsurance. Depending on your policy, increasing your level of cover may also raise your premium.

In any case, that’s better than plan B: your insurer refusing to pay the full amount of your claim.

Feel free to give us a call if you have any questions about underinsurance, or indeed the ‘average rule’.

 

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Are you a travel agent or a tour operator? http://www.policybee.co.uk/blog/9179/travel-agent-tour-operator http://www.policybee.co.uk/blog/9179/travel-agent-tour-operator#comments Wed, 16 Jul 2014 09:00:54 +0000 http://www.policybee.co.uk/blog/?p=9179 rubber duck in pool

Holiday hell 

For travel agents and tour operators, summer is about anything but relaxing in the sun.

If you’re good at what you do, business should be booming.

Contrary to popular belief, ‘travel agent’ and ‘tour operator’ aren’t just interchangeable … Read more....

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rubber duck in pool

Holiday hell 

For travel agents and tour operators, summer is about anything but relaxing in the sun.

If you’re good at what you do, business should be booming.

Contrary to popular belief, ‘travel agent’ and ‘tour operator’ aren’t just interchangeable terms for someone who sells holidays.

Most standard professional indemnity policies (ours included) will cover travel agents, but specifically exclude tour operators. Tour operators usually have to go to a specialist broker or insurer to get cover.

There’s a lot of crossover between the services tour operators and travel agents offer. Truthfully, we’ve had several customers who are unsure which they are.

Insurers and brokers have specific definitions for travel agents and tour operators. You might call yourself a travel agent, but if your business activities match their definition of a tour operator, that’s what your broker will notice.

It matters because, either way, your cover has to be right

What’s a tour operator? 

Confusingly, this doesn’t necessarily have anything to do with ‘tours’. A tour operator is someone who organises and sells package holidays.

A package holiday is simply two or more of the following components sold at an inclusive price: transport, accommodation, other tourist service (such as day trips, etc).

A tour operator is responsible for arranging all the different parts of the package holiday, including making the bookings.

As well as covering the costs of these individual components, a tour operator’s fees will also include an admin fee for themselves.

plane flying low over beach

What’s a travel agent? 

As well as selling the individual components of a holiday (flights, hotels, hire cars, etc), a travel agent can also sell package holidays.

However, a travel agent doesn’t organise the packages and isn’t responsible for making bookings. They’re a middleman between the customer and the tour operator; it’s a bit like how an insurance broker sits between the insurer and the customer.

Of course, a customer can buy several of the individual parts of their holiday from a travel agent and pay for them all in one go. This is isn’t a ‘package’ though, because the agent divides the fee to pay for the separate parts of the holiday.

Unlike a tour operator, the cost of a travel agent doesn’t include an admin fee. Instead, travel agents receive commission from the hotels and airlines they refer customers to.

Why does it matter? 

Since tour operators have a lot more responsibility, it’s a much riskier profession. There could be a problem with the flight, the accommodation, or the activities. Just one would be enough to ruin someone’s holiday, but what if all three fell through?

Even if a travel agent sells package holidays, the tour operator would be liable if something went wrong. Simply put, travel agents are less likely to face a claim.

Anything else? 

Knowing which category you fall into is important for making sure you get the right insurance cover.

If you’re a tour operator looking for professional indemnity, we recommend the British Insurance Brokers’ Association. They have access to hundreds of brokers, so they should be able to help you find what you need. Call them on 0870 950 1790, or visit their website.

For more information about the difference between travel agents and tour operators, contact the Association of British Travel Agents.

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Professional indemnity claims: why your solicitor can’t help http://www.policybee.co.uk/blog/9207/professional-indemnity-claims-solicitors http://www.policybee.co.uk/blog/9207/professional-indemnity-claims-solicitors#comments Thu, 10 Jul 2014 08:00:17 +0000 http://www.policybee.co.uk/blog/?p=9207 Hopscotch on pavement

Playing by the rules

Professional indemnity insurance is the best way to protect your business from mistakes and slip-ups.

It covers compensation and the cost of putting things right, as well as .

But it’s a two-way street. If you … Read more....

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Hopscotch on pavement

Playing by the rules

Professional indemnity insurance is the best way to protect your business from mistakes and slip-ups.

It covers compensation and the cost of putting things right, as well as .

But it’s a two-way street. If you want your policy to help when you have a claim, there are certain things you need to do to. Specifically:

  • Notify your broker as soon as you think you might have a claim.
  • Don’t admit liability.
  • Don’t try to settle the claim yourself (and/or without your insurer’s permission).
  • Don’t tell the person claiming against you that you’re insured.

In the heat of the professional-indemnity-claims-moment it’s easy to forget these – and other – dos and don’ts. It’s also tempting to do the first thing you can think of to help yourself.

Like calling your solicitor.

Although that seems like a sensible thing to do, it can end up invalidating your insurance. Granted, your policy wording doesn’t explicitly say it’s a breach of your obligations, but it can compromise your insurer’s position and ultimately leave you without cover.

Here’s why.

I am (not) the law

If there’s a claim against you and you need to fight your corner, all legal representatives need to be approved and agreed by your insurer first. 

If you’ve worked with a particular solicitor before and you’d like them to handle your claim, you can put this request to your broker (who’ll put it to your insurer). Be warned though: it’ll only be approved if it’s appropriate and beneficial to your claim.

The bottom line is your insurer has their own legal team, and they prefer to use them for a number of reasons:

Cost. Outside legal firms are an unknown and potentially very expensive quantity. Claims can rumble on for months, even years, and your insurer isn’t going to be happy shelling out for a specialist solicitor, with specialist fees, when your claim doesn’t need one. Using their in-house team keeps costs down.

Knowledge. Your local solicitor might be great at helping you move house but could they fight a negligence claim against you? Litigation is specialist, complicated and time-consuming. Your insurer’s legal team know your business, and your policy wording, inside out. Their experience is invaluable.

Expertise. Different solicitors have different specialisms – you could end up hiring one who’s not well-suited to your claim. In fact, they could do more harm than good. If your solicitor gets something wrong and promises something your insurer can’t (or won’t ) deliver, you’re the one who suffers. Insurers don’t like surprises, or spending money when they don’t have to. They’re not obliged to pay your claim or your legal costs if their position has been prejudiced.

Tug of war on beach

 

Do the right thing

Unfortunately, we’ve seen a handful of customers who’ve tried to resolve a claim themselves, sometimes with help from a solicitor, and have contacted us only when they’ve been unable to sort things out.

Don’t do this. At all. Ever.

If you do, know that you’re taking a risk. Once you’ve decided to deal with a situation yourself, your insurer can’t help later on. You’re on your own, even if things don’t work out.

More than anything, attempting to resolve a claim yourself (with or without a solicitor) is a complete waste of time and money. You’ve already bought an insurance policy for exactly this situation – why wouldn’t you use it?

By the book

Insurers’ regulations can seem stuffy, bewildering, and unfair. But they exist to make sure you get the best possible outcome for your claim.

Remember: if you fail to keep your side of the bargain, your insurer has no obligation to pay your claim.

If you have more questions about what not to do when claiming, we’re happy to help. Give us a call on 0845 872 5080.

 

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Customer showcase: Jo’s Photography http://www.policybee.co.uk/blog/9107/customer-showcase-jos-photography http://www.policybee.co.uk/blog/9107/customer-showcase-jos-photography#comments Mon, 07 Jul 2014 11:07:05 +0000 http://www.policybee.co.uk/blog/?p=9107 Jo's photography logo

Name: Joanne West
Telephone number: 07586489566
Email address: jowestphotography@outlook.com
What do you do: Photographer
How long have been in business: a year
Website: www.josphotography.yolasite.com
Facebook: photographyofjowest

What do you love most about running your own business?
I am flexible, and Read more....

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Jo's photography logo

Name: Joanne West
Telephone number: 07586489566
Email address: jowestphotography@outlook.com
What do you do: Photographer
How long have been in business: a year
Website: www.josphotography.yolasite.com
Facebook: photographyofjowest

What do you love most about running your own business?
I am flexible, and have time to spend with my family. All my work is my own, it was my dream and now its reality.

And what one thing would you change?
I would like to sell internationally

What’s been your greatest success?
Providing smiles to all my customers

What’s the best advice you can give someone starting up in business?
Research well, and commit. If it’s what you want go for it.

Who do you most admire in business and why?
I admire the time and effort placed into the business… It’s something I have achieved and can be proud of.

What would you do if you won the lottery?
Start advertising internationally and get my name known all over the world. Also share with friends and family I don’t need to be rich to be happy.

Why do you have professional indemnity insurance?
I am a professional, without would be silly. I need to protect my self and my work.

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Calling all business heroes http://www.policybee.co.uk/blog/8936/calling-business-heroes http://www.policybee.co.uk/blog/8936/calling-business-heroes#comments Thu, 03 Jul 2014 10:23:29 +0000 http://www.policybee.co.uk/blog/?p=8936 people talking over coffeeWe always love to hear from other people who have something interesting to say. This guest blog comes from Liz Slee, PR specialist at Enterprise Nation.

 

Calling all business heroes: tell us what you do for small businesses 

A … Read more....

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people talking over coffeeWe always love to hear from other people who have something interesting to say. This guest blog comes from Liz Slee, PR specialist at Enterprise Nation.

 

Calling all business heroes: tell us what you do for small businesses 

A new campaign to celebrate the work done by advisers for the growing number of startup firms has been launched.

The Enterprise Nation Top 50 Advisers Campaign seeks to highlight the work done behind the scenes to improve the skills and performance of the smallest British businesses. The help provided by these expert individuals aims to help the UK economy grow.

It’s also about raising awareness about what advice might look like for the smallest firms – and reinforces the evidence that companies that take advice on board are more likely to succeed.

Enterprise Nation manages the marketplace where recipients of the Government’s £30m Growth Voucher scheme can find subsidised advice.

Growth Vouchers are aimed at SMEs that don’t even know what advice they need let alone how to thrive.

It’s in part thanks to the heightened awareness around the Growth Voucher initiative that there’s now an increasing interest in taking strategic advice to overcome barriers and unlock growth potential.

Enterprise Nation wants to show this important work in action, in order to help more startups find a clear path towards growth.

The top regional advisers will be sought from around the country in the following categories:

  • Finance
  • Marketing
  • Digital
  • Leadership and management
  • Taking on staff

Government Enterprise Adviser Lord Young suggested small firms can’t afford not to take advice.

His report claims that ‘the evidence is unequivocal: businesses that seek and engage external help are more likely to grow. But much more needs to be done to encourage firms to invest in their capability.’

A report from The Royal Society for the Encouragement of Arts, Manufactures and Commerce suggested by 2018 there would be more than five million people running their own businesses, exceeding the number working in the public sector for the first time.

man raising hand in talk

To take part, business advisers need a nomination either from those they have helped, or to nominate themselves giving evidence and testimonials.

Free to enter, entries will be judged by a distinguished panel including Emma Clive Lewis, head of enterprise at ICAEW, Gavin Dollin, from the Department for Business, Industry and Skills, Anna Thomlinson, , head of mentoring for StartUp Loans, and James Layfield, co-founder of Central Working.

Entries for the Top 50 advisers close at the end of October with prizes contributed from Marketplace sponsors, including technology, hardware, office space, and sales coaching.

The Enterprise Nation Marketplace is funded by private sector brands.  These include technology specialist Toshiba, co-working expert Regus, cloud-based collaboration and data sharing software provider Citrix, telecoms brand Vodafone, cloud-based accounts, payroll software provider Sage One and EDF Energy, among others.

Applications are now open, you can apply here.
More information about Growth Vouchers can be found here.

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Insurance for ICAEW accountants http://www.policybee.co.uk/blog/8390/insurance-icaew-accountants http://www.policybee.co.uk/blog/8390/insurance-icaew-accountants#comments Thu, 03 Jul 2014 08:00:51 +0000 http://www.policybee.co.uk/blog/?p=8390 Professional bodiestoy calculator_torisan3500

Joining a professional body like the Institute of Chartered Accountants in England and Wales (ICAEW) is a smart move. It proves you have qualifications coming out of your ears, and that you’re more than capable of doing a … Read more....

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Professional bodiestoy calculator_torisan3500

Joining a professional body like the Institute of Chartered Accountants in England and Wales (ICAEW) is a smart move. It proves you have qualifications coming out of your ears, and that you’re more than capable of doing a great job.

Of course, if the ICAEW is to represent quality accountants, they can’t accept any old chancer.

As well as holding the right accounting qualifications, ICAEW members engaged in public practice have to have professional indemnity insurance (PI).

PI insurance ensures that, if a client thinks your mistake has cost them money, you don’t have to pay for legal fees and compensation. It’s the best way to protect your business from the consequences of unfortunate errors.

Beside which, you can’t join the ICAEW without it. Here’s what they say about it.

More is more 

Unfortunately, you can’t just buy the cheapest cover you can find and be done with it. The ICAEW has some pretty specific rules about what your policy must include, how much you must have, and who you buy it from.

First, you have to use an ICAEW approved insurer. Here’s a full list of these. We only work with ICAEW approved insurers, and our policy wordings meet their minimum requirements. If you’re a customer of ours, you can relax.

Levels of cover

The ICAEW stipulates that members must have at least £1.5 million PI insurance. It’s up to you whether you want this level of cover in the aggregate or for any one claim.

However, if you do decide to buy more than £1.5 million, it doesn’t have to come from an ICAEW approved insurer. Likewise, the wording doesn’t have to be compliant either.

If your firm’s gross annual income is less than£600,000, you’re exempt from the £1.5 million minimum stipulation. Instead, your level of cover must be equal to one and a half times your firm’s gross annual income, with a minimum level of indemnity of £100,000.

But, the ICAEW does warn that less than £1.5 million might not be enough protection if there’s a claim.

Licensed firms, or firms authorised by the FCA to conduct insurance mediation activities, must have at least €1,120,200 for any one claim and €1,680,300 in total. This is to comply with the EU’s Insurance Mediation Directive regulations.

Finally, if your firm is an accredited probate firm, your minimum level of cover for probate work must be at least £500,000 for ‘any one claim’.

Is that it? 

Not quite.

Each year, firms have to complete a certificate of compliance to prove they hold the right PI insurance. This makes up part of your Practice Assurance annual return. Be warned: the ICEW checks with insurers and brokers that the information you supply is accurate. So make sure it is.

Untouchable 

If, for whatever reason, you can’t buy insurance from a participating insurer, or that meets these specifications, you’re able to join something called theassigned risks pool. By joining, the ICAEW is able to offer you some degree of insurance protection – it works a bit like a collective.

You must be able to prove your attempts to buy insurance from elsewhere were unsuccessful. The ICAEW will only cover you for claims made while you’re in the risks pool. If a client alleges you’ve made a mistake, and it happened before you joined the pool, you’re not protection.

You also have to sign an ICAEW contract stating you agree to pay their premium, and agree to an ICAEW review of your business. The maximum amount of time any business can spend in the assigned risks pool is twenty four consecutive months.

Count on us 

If you’re in, or hoping to join, the ICAEW, we hope this has given you a better sense of your insurance obligations.

For ICAEW-specific advice, we recommend you visit their website, or get in touch with them on 01908 248 250.

If you have any questions about professional indemnity insurance for ICAEW accountants,  feel free to give us a ring on 0845 872 5080.

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