Insurance myths
Save your business money by learning the truth behind 10 of the most common misconceptions about insurance:
1) My tenant is doing some alterations to the building. He has my permission to do this, so I don’t need to tell insurers.
You must inform your insurers of any work being undertaken unless it is purely cosmetic and does not affect the structural integrity of the building. Any work involving removal of supporting walls, application of heat, repairs to the roof or the erection of scaffolding would be deemed to be a material fact and should be disclosed to insurers. If in doubt – tell them!
2) My tenant is replacing an asbestos roof – I don’t need to inform my insurer.
As asbestos is a hazardous material it requires specialist asbestos removal firms to dispose of it in a controlled environment. Failure to inform insurers could result in a liability claim being repudiated.
3) I don’t need to comply with insurer’s risk improvement requirements following survey – these are only suggestions aren’t they?
Insurers will survey certain risks to assess the housekeeping and general physical security and upkeep of the property. Following the survey they will issue requirements and recommendations as appropriate.
Requirements are mandatory and need to be completed within insurer’s timescales. Failure to do so could result in a claim being repudiated, your policy cancelled or even punitive terms being applied.
Recommendations are best practice suggestions to enhance the risk – generally aimed at protecting the asset – which is in everyone’s interest. Compliance is advisable and could result in better premium and terms. However, these are not compulsory.
4) I do not need to have my lift inspected for defects as I have a service contract and my lift servicing company will inspect the lift and rectify any faults.
To comply with the requirements of the Lifting Operations and Lifting Equipment Regulations 1998 Passenger lifts need to be inspected at 6 monthly periods (12 months for non-passenger lifts) by a person who is independent, impartial and competent to allow objective decisions to be made with regards to any defect found during examination.
The thorough examination or inspections are in addition to any routine maintenance inspections that are carried out under a service agreement.
5) I set up my Insurance on Direct Debit; I have missed a payment yet I will still be covered.
It is a condition of an insurance policy that the premiums are paid on time. Failure to pay your premiums will result in the policy being rendered inoperative.
6) The floor construction is not important!
Different rates of premium apply for buildings with concrete floors and buildings with timber floors. This is because a concrete floor has superior fire resistance. If your policy states that the floor is concrete and this is not the case, a claim could be repudiated.
7) You do not need to tell your insurers about a change in tenancy type/occupancy.
For example, Cadogan Keelan Westall had a client that had informed them his tenant type were working professionals, when in reality they were students – students that had actually cultivated their own cannabis farm within the flat!
A claim arose and was repudiated as failure to inform insurers of a change in tenant type is considered to be non-disclosure of material fact.
8) The declared value/sum insured and the market value are the same thing.
The market value takes into account the property, the foundations and the land the property sits on.
The declared value refers to the cost of rebuilding the property if a total loss was to occur. Your property should therefore not be insured for the market value as the land would still be there.
9) If you are only insuring contents, construction details are irrelevant.
Construction details are highly relevant as they assess the risk that your contents are under. If for instance you had office equipment in a portable cabin the risk would be considered high – this is due to the fact that the portable cabin is at a higher theft and arson risk due to being of weaker construction.
10) You don’t need to disclose losses where you did not make a claim.
All losses must be disclosed even if you didn’t make a claim as these may show a history of problems at a particular address.
Failure to notify your insurance provider of losses is considered to be non-disclosure of material fact and could result in future claims being repudiated.
For more information, call +44 (0)1420 488288 or visit Cadogan Keelan Westall
