Building a successful business in any marketplace requires a huge amount of dedication, with problem-solving, long hours and an intense focus on the end goal all very much the norm. While the marine industry is a great place to trade and develop a business, it does come with more than its fair share of risk, to add to the complexity of the day-to-day running.
As such, appropriate marine trade insurance cover is a key consideration to ensure that you have protection and business continuity if you find yourself in a worst-case scenario.
Using the services of a marine trade insurance provider or broker means that you will benefit from years of experience, helping to spot areas of concern that you may not even consider yourself.
Ruby Spence, account handler for Haven Knox-Johnston Commercial, outlines how and when businesses could be missing important details.
“Ensuring your insurance cover accurately reflects your business needs is critical and, in some cases, existential. There are certain areas where particular attention is needed where, in HKJ’s experience, businesses tend to slip up most frequently,” says Spence.
Employers liability insurance
Employers’ liability (EL) insurance provides cover to employers in respect of negligence claims made against them by their employees as a result of injury in the workplace, or if they contract a disease when in the working environment. It is a legal requirement for businesses with multiple directors, limited companies that have one or more people on the payroll, and those employing contractors, labourers and volunteers who perform their role under guidance. However, EL is not a legal requirement if the employee is a relative of the insured, if the company has one employee who also owns more than 50 per cent of the shares, or if the insured employs people who are not resident in the UK. Failing to maintain this coverage can result in fines of up to £2,500 per day. In the UK the policy must provide at least £5 million of cover.
Example claim:
An employee injures themselves operating a travel lift due to the employer’s negligence. This could be due to poor maintenance, no training or a lack of protective equipment provided.
An employee becomes unwell due to prolonged exposure to paint fumes working in a spray booth. This could be due to poor maintenance, no training or a lack of protective equipment provided.
Estimating sums insured
Regardless of whether it’s buildings, stock, contents or plant, inaccurate estimations of value can leave a business under insured in the event of a loss. Regularly obtaining rebuild valuations and maintaining a stock, contents and plant inventory can prevent financial setbacks in the event of a claim. When values change over time, ensuring your insurance provider is updated and your policy is adjusted is important. A simple oversight of declared value could cause a major problem for your business, possibly even closure.
Example of what would happen in the case of an under insured claim:
An office and chandlery building insured for £250,000 is destroyed due to an electrical fire. The insurers loss adjuster visits and advises it will cost £500,000 to return to its original state. In this scenario, you would be 50 per cent under insured, which would trigger an under insurance clause known as ‘law of average’. In a claim settlement, the insurers would probably settle at 50% of the sum insured for which you would receive £125,000. Additional costs of £375,000 after the settlement would be your responsibility.
Business risks
Failure to fully assess your specific business risks can create gaps in coverage leaving you exposed. As previously said, each business in the marine trade is unique and as such it is vital to ensure that your insurance policy is tailored accordingly. It is often the case that a generic off the shelf business insurance policy will not be adequate for businesses operating in the marine environment.
Example of risk not covered:
A marketing agency undertaking film work onboard boats has a generic business insurance cover. In the small print, the policy excludes work undertaken whilst afloat on the water leaving the business exposed to all risks during this work.
Updating your coverage
Businesses evolve as they grow, and in turn so do their risks. Failing to update your policy annually to reflect these changes can result in outdated coverage which is not fit for the businesses’ current trading activities. Staying proactive and adapting your insurance cover to your business’s current state is a key aspect of risk management.
Geographic scope of the policy
Business insurance often comes with geographical working restrictions. If you are planning on conducting business off site or overseas, it is recommended to check that your policy will offer adequate coverage or consider adding business travel insurance. Overlooking this aspect may expose your business and employees to unforeseen risks and costs.
Example claim:
A marine engineer picks up a job to service several engines in the South of France. Following a spillage of oil an insurance claim is made. The policy only covers trading activities in the UK and Ireland as a geographical region, so his claim is rejected.
Choosing the most appropriate policy
When comparing policies, it’s important to not only consider cost but also coverage levels, ongoing administration fees, excesses and the insurer’s reputation for service when you need help. Sometimes, investing a bit more at the outset ensures comprehensive protection and peace of mind throughout the year. Not all insurance policies are created equally.
As with all insurance policies, the importance of thoroughly reading the small print, including any policy endorsements and exclusions, cannot be overstated, as failure to do so could result in a claim not being paid.
A professional marine trade insurance provider will talk you through the ins and outs of each policy and help build the right cover for your business.
The post What are businesses missing when it comes to marine trade insurance? appeared first on Marine Industry News.
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