5 Common business insurance mistakes
At the risk of sounding somewhat long in the tooth, I have been advising small businesses on their insurance needs for longer than I care to remember (clue-it's more than 30). Over the years, fortunately, I have not had to deal with many occasions where insurance has let the policyholder down but these can, and do, occur.
I thought I would just draft out five main mistakes that I have seen over the years as a form of reminder to all you prudent business owners out there:
1. Failing to understand ownership
When any kind of asset is insured it is important to consider who is the legal owner of that asset. the insurance should then be arranged in that name or at least noting their interest. I have had occasions in the past where it comes to light in the event of a claim that the legal owner of the items being claimed for is not the policyholder themselves. This can cause problems in seeking payment from the insurer.
2. Failing to disclose driving convictions
Failing to disclose driving convictions is definitely a false economy. It may be convenient to "forget" those speeding convictions that may or may not have expired now, but if it comes to light that these have not been disclosed to the insurer then you are on a sticky wicket. If you have employees driving company vehicles, make sure you carry out regular licence audits (its easier now with just a code from the DVLA) and tell your insurers of any history discovered.
3. Failing to disclose past claims
Similarly, its easy to forget that minor break in 4 years ago, or the burst pipe that "didnt really cost much". But you must make sure that these are all included in your presentation to your insurers. A good broker will ask about the circumstances around these and what might have changed since then to mitigate it happening again.
4. Ignoring VAT issues
An easy one to forget - if you are not VAT registered and therefore cannot claim VAT back, make sure that your sums insured reflect this. If you are insuring a building valued at £1m for rebuilding, for example, is this valuation inclusive or exclusive of VAT. It make a 20% difference and enough to get you into hot water with underinsurance.
5. Reluctance to notify/recognise potential claims
So often, an accident ocurrs or a disagreement with a customer perhaps and no report is made to the insurers. Then, perhaps years later, a claim comes in from an old employee, a disgruntled ex customer or a supplier who has fallen on hard times and you seek to claim from your insurance. There will have to be some explaining to do as to why it was not repoited to them when you were first aware of it and, if they feel theior position has been predjudeiced, they may refuse to deal with the claim.
Just a few more common issues that businesses can fall prey to. Always diuscuss any of these issues with your insurance broker who will give you the best advice on how to approach and deal with these situations.