A Guide to Business Insurance for UK Marine Trades
A Guide to Business Insurance for UK Marine Trades
Introduction
Insurance solutions for businesses operating in the Marine Leisure Sector have been slow to evolve compared to other sectors. Until relatively recently, a boatyard owner could find him/herself having to source a suite of insurance products to cover buildings, contents, financial risks, vessels, pontoons and indemnity against a range of legal liabilities. Whilst the first Marine Traders "Combined" policy that provided cover for all these risks appeared in the late 1990s, the market did not rush to embrace the new paradigm. Some significant providers of insurance in this Sector did not release a "Combined" solution until as late as 2007 and others still only offer stand-alone covers.
Advantages of Combined Insurance Policies
There are numerous advantages to business owners of having a single insurance policy that combines cover in respect of the majority of their needs. First and foremost it streamlines administrative processes by reducing documentation considerably, thus saving business owners time and money. It also ensures the owner has a single renewal date to deal with. Probably the main benefit to businesses is the potential premium savings that can be made through this type of system: the more cover that can be placed on a single policy gives the provider more scope to reduce the overall insurance premium.
Marine Trades Insurance Providers
Combined Insurance policies for marine-related businesses are now available from a number of specialist providers. Whilst the majority of these providers will deal direct with the public, some will deal only through insurance brokers. An insurance provider that sells direct to the public will only offer their own product. Dealing directly with insurers not only restricts you in terms of available insurance options, it also means you have to invest valuable time in shopping around providers for competitive quotations. An independent specialist Marine Trades Insurance broker can potentially save you and your business time and money by conducting a full broking exercise across the market on your behalf.
Specialist brokers can also assist in arranging bespoke cover as opposed to a standard "off-the-peg" solution. This can give your business vital benefits where standard policy exclusions are amended or removed, widening the overall scope of protection. You may also benefit in the event of a claim:
Structure of Marine Combined Insurance Policies
Before outlining the structure of a policy it is necessary to stress the importance of ensuring that the correct limits of indemnity form the basis of your insurance cover. It is tempting for businesses seeking to reduce their costs to deliberately underinsure their businesses. This can potentially prove catastrophic in the event of a loss, as an insurer will almost certainly invoke the principle of "Average" when underinsurance is discovered.
The example above underlines the importance for businesses to establish the correct basis of cover with their provider and then negotiate a competitive premium. An independent specialist broker with access to a number of alternative markets will help you obtain the right solution at the best available premium.
Marine Trades Combined Insurance policies generally follow the same model, with the odd exception as to where a particular item may appear. For example, some policies will include pontoons in the Material Damage Section whilst others may bracket them in the Marine Section. Outlined below is a typical policy structure:
Policy Conditions, Exclusions and Warranties
As detailed above, policy conditions and exclusions will vary from insurer to insurer. Even if you are purchasing your policy by telephone you should always ask your provider to go through them with you in addition to any warranties that will have been imposed. There are significant differences between each of these:
Other Insurances for your Marine Trades Insurance Programme
Directors & Officers Liability Insurance (Management Protection)
Modern legislation now means company directors can now be sued as individuals in respect of their decisions and actions as directors or managers of businesses. The duties of company directors are established in law and include the following areas of responsibility:
How Can Claims Arise?
Whilst public bodies such as the Health & Safety Executive can prosecute directors if they are perceived to have failed to comply with their statutory duties, claims could also arise from numerous third parties such as employees, creditors, customers or suppliers.
With the number of employees injured at work increasing by over 100,000 in 2010 and lawyers able to act on a "No-Win, No-Fee" basis, directors appear to be more exposed than ever.
What Are The Financial Implications of a Claim? Directors will be personally liable for meeting the cost of legal expenses as well as any damages awards, fines or penalties. This means assets such as their cars, houses, stocks and money could be lost. Companies are prohibited from indemnifying their directors in the event of their insolvency.
How Can Directors & Officers Liability Insurance Help?
Whilst a D&O policy will not cover any fines against directors it will cover the cost of defending a prosecution until the point when guilt is established. This could potentially save tens, if not hundreds, of thousands of pounds of an individual's assets in legal expenses. A D&O policy can also cover awards for damages and legal expenses made against directors in civil cases.
Professional Indemnity Insurance
If you give advice, conduct surveys or inspections for a fee, your legal liabilities in respect of these activities are excluded on your Marine Trade policy. A stand-alone Professional Indemnity policy will fill the gap in your insurance cover.
Tractor & "Special Types" Insurance
Tractors and other special type vehicles which are road-registered are excluded from standard public liability policies, as are many unregistered vehicles, if travelling on, or crossing, public highways. This may also apply to areas where the public have access such as ports, harbours and boatyards. Types of vehicles that fit into this class are: Tractors, Cranes, Fork Lifts, Cherrypickers, Boat Lifts and other self-propelled mobile plant.
Third Party insurance is compulsory and a failure to have this basic cover is considered one of the most serious offences. A substantial fine and disqualification are amongst the recommended penalties.
Driving uninsured (or allowing your employees to do so) is an absolute offence which means there is no discretionary defence available, ie the vehicle is either insured or it is not. If, for any reason it is not insured, the offence is committed.
Without insurance your business and your personal assets are at risk from potentially huge compensation claims being made against you
Comprehensive Road Risks insurance in for tractors and "Special Types" is available at very competitive rates from your specialist broker.
Summary
Modern businesses need modern insurance programmes. Cutting cover to cut costs is not the solution. Your 9-point step to getting the right cover for your business at the best available premium is:
1. Choose an independent specialist broker.
2. Ask them what they can offer you in terms of support in the event of a claim.
3. Ask them to visit you to look over your business.
4. Ensure you fully disclose all relevant information about your business
5. Accurately assess the value of your premises & property and the levels of your turnover, payroll and gross profit.
6. Request 3 quotations.
7. Ensure you have all conditions, exclusions, warranties explained to you verbally - a written summary is not sufficient.
8. If you think some of the exclusions or warranties are unreasonable then ask your broker to negotiate their removal.
9. Finally, negotiate the best premium you can get from your appointed broker.
Disclaimer: This article does not constitute specific advice or recommendation to any individual or business. Individuals and businesses should seek the advice of an appropriately authorised and regulated insurance broker or intermediary.
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