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Additional Classes of Insurance | Page 1

 

Contents

 

 

 

Material Damage Insurance

 

Computer Breakdown    

An important insurance to consider given the increasing reliance of business on IT, this can provide cover for hardware and software, and include loss, damage or corruption. Cover can also extend to include reinstatement of data and increased cost of working following a loss.


Contract Works    

Contract Works cover is generally bought by Construction firms, although the entity responsible for taking out the insurance is determined by the terms of the contract and it could fall to the contractor or the employer. It covers work underway on a site and property in transit, and protects against loss or damage while work is undertaken. This cover often doesn’t include Employer’s or Public Liability, which is bought separately and also often excludes existing structures. It can be extended to include plant, machinery, hired in plant and employees tools.


Defective Title    

This provides cover for problems arising out of property transactions, potentially including where there is an actual or perceived issue with the title of a property being sold or an issue where covenants may not have been observed.


Exhibitions    

This generally covers property while it is used at an exhibition. Exhibition insurance can also cover for cancellation or disruption for an exhibitor.


Glass Breakage    

Property damage insurance specifically covering breakage of windows, or other glass and sanitary ware, which is typically excluded unless “All Risks” cover on buildings are purchased. Can be bought separately to cover buildings or furniture.

 

Hired In Plant    

Generally most applicable for companies who regularly hire machinery and plant, this covers legal liability for items that are hired and avoids the need to pay the hire company for insurance each time an item is hired. It can also be extended to include continuing hire charges between the loss date and replacement of the item.

 

Location Limits    

With very few exceptions, cover in respect of “contents” is restricted to the business premises only, i.e. the site out of which you operate, and is insured under the policy.  However, if many employees temporarily work from home or visit clients, there may be a need to insure business equipment i.e. laptops, presentation aids, tools etc, whilst away from the premises.  An extension can be arranged to insure specified items whilst anywhere in the UK, Europe or the world (if required).

 

Loss of book debts    

This will cover you for outstanding amounts that you are owed and unable to recover following an insured event as a result of the loss of accounting or other business records.

 

Marine Hull    

Marine Hull covers loss or damage to vessels themselves, as opposed to Marine Cargo which covers the goods on board. This also generally covers machinery and equipment.

 

Sprinkler Leakage    

This covers property damage caused by inadvertent leakage or discharge of a sprinkler system.

 

Subsidence, Heave and Landslip    

This insurance covers for various movement of the ground beneath a structure (downwards, upwards, or down a slope respectively). The cover is usually for repairing the building from damage caused by these movements, but can also include business equipment, stock etc, and business interruption cover if for example you are forced to move out of the premises. Prevention of future subsidence is generally not included in this cover.


Terrorism    

Terrorism is clearly a growing and evolving risk in the modern world. Many standard property and liability policies will exclude Terrorism from the risks that are covered, meaning that it is important to purchase separate coverage for this risk. As well as specific property damage, coverage can extend to losses owing to forced evacuations, police raids, etc.

 


Consequential Loss

 

Advance Profits/ Anticipated Loss of Profits

This cover will protect you against a loss of profit at a new location before the project is completed, leading to a delay which has an impact on your revenue or profit e.g. a new branch of a store which is destroyed during the course of construction and the opening is therefore delayed.

 

Book Debts    

This will cover you for outstanding amounts that you are owed and unable to recover following an insured event as a result of the loss of accounting or other business records.

 

Computer Breakdown

An important insurance to consider given the increasing reliance of business on IT, this can provide cover for hardware and software, and include loss, damage or corruption. Cover can also extend to include reinstatement of data and increased cost of working following a loss.

 

Denial of Access (damage/ non-damage)

This cover compensates for loss when access to a company premises is prevented or restricted. There can be varying triggers covering e.g. public authority orders, natural catastrophes, terrorism etc.

 

Indemnity Period - standard 12 months/ extended cover    

It is important to consider carefully how a loss could affect the on-going activity of the company, and how Business Interruption insurance can play a role in helping you to recover from the loss. Often it can be hard to consider the consequences of a loss before it happens, but it is important to think through as much of the detail as possible in advance to ensure that you purchase a long enough indemnity period to allow you to fully recover. It is not simply a case of how long it would take to rebuild a factory, warehouse or similar following a total loss. Further points to take into account include:

•    Lead times for any critical equipment, particularly where specialist equipment requires specific suppliers
•    Getting a new site ready for production, e.g. any certifications needed, and associated lead times for scheduling
•    Customer relationships and how these can be maintained / how long they may take to re-establish, for example losing shelf space in major retailers
•    Supplier relationships and whether an extended interruption in production could be managed by stockpiling, or whether new supplier relationships would need to be established
•    Additional time to re-stock the distribution chain.

It is important to think through in detail with your insurance advisers how a likely scenario would play out, and make insurance-buying decisions from an informed position.

 

Liability for Continuing Hire Charges for Plant    

Generally bought in connection with Hired in Plant cover, this will cover the ongoing hire charges, up to a maximum indemnity period, during the time taken to repair or replace the damaged equipment.

 

Loss of Attraction    

This Business Interruption insurance covers the insured where an event not causing damage to the company itself nonetheless leads to a loss of custom, for example, a nearby terrorist incident impacting on a hotel’s custom and hence profits. It is important to consider potential triggers and their impact, and ensure that the cover is tailored to the risks.

 

Loss or Damage of Suppliers’ and/or Customers’ Premises

These extensions cover your business interruption where there is damage at the premises of a supplier or customer which affects your business, for example, if you cannot obtain required raw materials for production or your customer is no longer able to purchase your products, and your profit may be impacted as a result. If individual suppliers or customers are specified in this policy this may allow higher limits to be purchased.

 

Loss of Income and Uninsured Losses

Business Interruption insurance generally provides cover for loss of income/profit and/or additional costs due to an inability to trade for an agreed period of time after the incident occurs. There are a number of potentially uninsured risks under this cover which you should be aware of, particularly fixed costs such as for staff or transport which cannot be recuperated.

 

Murder, Suicide or Infectious Diseases    

These extensions cover interruption of the business which occurs due to an occurrence of murder, suicide, or outbreak of infectious disease and in some cases food poisoning or vermin.  

 

Public Utilities Interruption and Terminal Ends    

You may suffer a financial loss if your electric, gas, water or telecommunications links are interrupted following damage e.g. following a power cut. This extension will protect you accordingly. As standard this extension will only cover interruption due to damage at a sub-station, however, a separate extension can be purchased for interruption due to damage to pipes or cables up to your terminal ends.

 

Rent   

This is insurance for landlords of properties and guarantees the rent if there are issues with tenants.

 

Terrorism    

Terrorism is clearly a growing and evolving risk in the modern world. Many standard property and liability policies will exclude Terrorism from the risks that are covered, meaning that it is important to purchase separate coverage for this risk. As well as specific property damage, coverage can extend to losses owing to forced evacuations, police raids, etc.

 

Uneconomic or Additional Increased Cost of Working Expenses  

 Sometimes the costs you incur to protect the business and keep it running after a loss will go beyond costs incurred to limit any loss of gross profit. These uneconomic costs are not covered by a standard business interruption policy but can be insured under a separate extension, covering such costs without the need to justify any saving in the gross profit claim.

 

Goods in Transit & Cargo Insurance

 

Marine Cargo  

This insurance covers property as it is in transit by sea, air, road or rail. This generally only includes perils associated with the movement of the cargo.


On Third-Party Vehicles    

This cover protects you against damage to your goods being transported by you using a third party or sub-contractor. It is important to understand that carriers limit liability to your goods and if there is a loss you are very likely to suffer a shortfall if you do not insure the goods yourself.

 

On Own Vehicles    

This insurance cover protects you against damage to your goods being transported by you in your own vehicles.


Stock Throughput

A Stock Throughput policy insures goods from their place of origin to their final destination. Rather than purchase separate covers, this type of policy can cover the goods whilst transported by sea/air, whilst transported inland, and whilst in storage, including loading/unloading etc which can sometimes fall in gaps where cover is placed under separate policies.

 

Contracting Risks

 

Continuing Hire Charges

Generally bought in connection with Hired in Plant cover, this will cover the ongoing hire charges, up to a maximum indemnity period, during the time taken to repair or replace the damaged equipment.


Contract Works

Contract Works cover is generally bought by Construction firms, although the entity responsible for taking out the insurance is determined by the terms of the contract and it could fall to the contractor or the employer. It covers work underway on a site and property in transit and protects against loss or damage while work is undertaken. This cover often doesn’t include Employer’s or Public Liability, which is bought separately and also often excludes existing structures. It can be extended to include plant, machinery, hired in plant and employees tools.


Design and Defect Risks    

Contractors All Risk policies exclude, as standard, damage caused by defective design, specification, materials or workmanship. Several optional extensions can write back in cover to varying degrees and can include cover for the surrounding property, the costs of rectification of the original defect and damage which is caused by the rectification process.


Erection All Risks

This provides cover for risks associated with the erection and installation of plant, machinery, structures etc, and can cover the main contractor, subcontractors, and sometimes suppliers. The cover includes physical damage and can also include testing and commissioning extensions. Delayed Start-Up insurance is often bought as an extension to this cover.


Hired in Plant

Generally most applicable for companies who regularly hire machinery and plant, this covers legal liability for items that are hired and avoids the need to pay the hire company for insurance each time an item is hired. Can also be extended to include continuing hire charges between the loss date and replacement of the item.


Machinery Movement

Provides cover for loss or damage while machinery is being moved. Cover can be bought to include erecting, installing, dismantling etc.


Own Plant, Machinery, Tools and Temporary Buildings

As part of the insurance covering a construction site, cover for these elements can be bought separately, depending on the values involved.

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