Commercial Insurance & Business Liability
These FAQs cover a large area of specialised, technical areas of Insurance. As no two situations are the same, only the basic position is outlined. The answers do not provide a complete or authoritative statement of the law, nor do they constitute legal advice by the author. The information provided is only a snapshot: it does not create a contractual relationship nor does it form part of any other advice, whether paid or free.
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Q. Can I use any Insurance Company for Business Insurance?
A. No you need a company that specialises in your sort of business, the majority claim to, but a lot do not. If you get your policy wrong it can cost you dearly.
Q. Why do I need Employers Liability?
A. Even if you are One Man Band, if you ask anyone to help you with the smallest job, you leave yourself open to a claim, with the slightest accident. Apart from the obvious, you must have Employers Liability for all staff to comply with UK Law.
Q. Why do I need Public Liability?
A. Any sort of mishap involving anything, is then covered, again to comply with UK Law.
Q. Do I need to Insure the premises?
A. If you are the Freeholder, most certainly. If you are a leaseholder or tenant, check with your Landord as to whether he pays the Policy or you do. If you pay the Policy you will find a clause in the lease saying that you cannot cancel or change the Policy without notifying the Landlord or the Insurance Company in cases of lapsing has to notify the Landlord and allow him time to arrange cover. In most cases the Landlord arranges cover and recharges the tenant.
Q. Are the Goods, Fixtures and Fittings, included in the Premises Insurance?
A. No, they are designated separately usually included with the Public Liability and Employers Liability Package. Below are some guide lines to help you understand the vagaries of Business Insurance.
Q. Do I need cover for Personal Items?
A. If you are living on the premises your personal belongings are not normally covered in the business stock and fixtures and fittings. It would be advisable to arrange cover for your personal items.
Helpful recommendations to guide you through the Business Insurance Policies, be warned different businesses have different priorities, these relate to Licensed Property.
Good insurance is vital, ideally with a company that specialises in licensed premises, your local Insurance Agent or Broker may claim to have the knowledge but don’t restrict yourself, shop around, talk to people in the industry. On many occasions large savings can be made, but again it must suit your proposed business.
Watch for the amount to be paid by you on any claim, accept a reasonable figure, this prevents silly claims being put in. If you have a genuine freehouse where you own the property it is worth considering a policy for the buildings and a separate policy for the contents, business insurance and public liability. If you have one policy for everything in the event of a claim the whole policy goes up, if you have two policies only one policy will go up, it is always worth investigating and asking questions.
If you are taking a lease or a tenancy, it may be full repairing and insuring, in most cases the insurance for the buildings is done by the pub company, unfortunately, in most cases you will find that you can insure the building for considerably less than the figure you are being charged. They have blanket policies and divide the costs up accordingly and one of these days I might meet someone whose policy is less than they can arrange privately.
However the contents, personal possessions, business and public liability are down to you under normal circumstances. Ensure that the valuation on any aspects of the insurance is the replacement valuation not the current value.
You must have a policy in place at the time that you exchange contracts, not on completion. Some Solicitors arrange temporary cover for this period but don’t rely on it.
Check with the vendor on any possible special requirements in respect of insurance, there may be exclusions on certain cover because the business has been subject to an excessive amount of claims on certain specific things; it could be that there have been a number of burglaries on the premises. This effectively means that it is a dodgy area to run a business and your insurance could well insist on very sophisticated security systems being installed before they give you full cover, if they have not already been installed. Also check the Warranties on any existing security systems.
Make sure that your insurance policy covers you for all the activities that you are involved in, take a copy of your operating schedule with you when you are discussing the terms and conditions of your insurance.
It also pays to insist on an Electrical Certificate a Gas Heating Certificate normally Corgi, get your Solicitor to ask for that, it tends to carry more weight. Your insurance company may insist that up to date copies are available as part of your insurance cover, especially from a fire risk aspect.
Finally, a big scam by a number of Pub Co’s is to use their compulsory Buildings Insurance Policy as an additional Revenue Stream. The Buildings Policy with most Pub Co’s can normally be bought for at least 15% less than they charge you and you have to accept their policy, in some cases they are now charging double the real cost. I had a meeting with a very disenchanted lessee, who had spent a fortune on refurbishing a leased Pub and the Pub Co were charging him Â£490 per calendar month.
The Publican Newspaper also ran an article on Pub Co’s doing this, it is technically legal within the lease but sharp practice, before you sign the lease ensure that you are happy with cost of the policy and have assurances that it will not be used as a Revenue Stream that you cannot dispute or make alternative arrangements.
These FAQ’s are for your guidance, more complex or specific issues, you may or will need to consult a specialist.
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