In our ever-changing and challenging world, we’re seeing it become increasingly common for governing bodies, banks and customers to require our clients to have higher insurance limits in place before signing on the dotted line.
Failure to meet these required insurance limits could result in lost business contracts and inadequate public and product liability cover.
And, in the worst-case scenario, could result in failure to meet financial obligations as an employer in the event of personal injury or compensation for loss of life if a catastrophic insured event occurred.
Our aim as a risk protection adviser is to anticipate the challenges our clients face, so that we can provide the best support to enable your insurance programme to perform when you need it.
One of those challenges is indemnity limits. At a time when inflation is running high and costs are being scrutinised, it’s tempting to look at what to cut. Alongside the guidance provided by the Health & Safety Executive, we’re focusing on five key areas when it comes to reviewing policy insurance limits with all of our clients:
- Employers’ Liability covers the costs of employee claims for illness or injury caused by their work due to employers’ negligence.
Our advice reflects the current compensation climate. For example, if a large insured event occurred at a single operating site with more than 50 employees present, we would recommend an increase from the standard recommended cover of £10million employers’ liability cover to £25million to fully protect the business and its employees against rising costs of medical and financial compensation levels.
- Professional indemnity protects you against claims for loss or damage made by clients or third parties as a result of the negative impact of services you provided or advice you offered. Compensation claims can be brought against you even if you provided a service or offered advice for free.
In the last decade, professional indemnity insurance providers have been experiencing a “hard market” – restricting the cover provided and, in many cases, removing the option of cover altogether. The good news is, we’re seeing that market easing slightly, which will be good news for clients. Our aim is to support clients to understand the extent to which a PI claim can affect their operations. Our specialist PI team has the experience in the market and understanding of the challenges to guide clients to make the right decisions for their business. Simple tweaks to a policy, such as adding in ‘round the clock extensions’, can help to mitigate contractual shortfalls.
- Public & products liability cover protects your business if you or your employees are held legally liable for accidental injury to clients, customers or the public, or for damage to their property as a result of your business’s activities or products.
Having the right level of public and products liability cover is business critical. Our team will work with you to provide the right advice on the appropriate indemnity limits to protect you, your business and your people.
- Business interruption protects your business income in the event of an incident causing you to cease trading for a period of time.
We recommend that clients have a minimum of 24 to 36 months’ cover. More often that not, it takes longer than you think to get your business back to pre-event activity following an incident.
- Rebuild cost assessments establish the actual cost to rebuild your property. Inflation has created an unprecedented shortages in labour, supply chain and raw materials all resulting in the dramatic increase in prices. If these increases have not been taken into consideration and reflected in your property insurance, you could find yourself underinsured.
We encourage all of our clients to conduct a rebuild cost assessment to avoid being underinsured. In a recent report from Aviva, 80% of property owners were underinsured, which if not addressed, could dramatically impact your business if you needed to make a claim.
- Allow your insurance adviser to vet and review contractual documents to ensure you have adequate cover.
- Analyse existing insurance limits with your insurance adviser to make sure they are ‘match fit’ and ‘fit for purpose’ in today’s society.
- Review your current business disaster recovery plan annually to make sure it remains suitable, appropriate and in line with changing market conditions. And if you haven’t got a plan – make creating one a priority.
Our ‘top tips’ on selecting the right policy cover limits.