Attention all landlords: ‘10 of the best’ available for you

Finding relevant and pertinent insurance protection for commercial and residential properties can be a struggle for landlords, but as your broker, we have access to market leading cover offering all that a landlord requires.

We can help landlords navigate what can be a huge issue – the potential trap of the sum insured and the insurance law of ‘average’. Now it is possible to steer clear of the pitfall of underinsurance, if an RICS-accredited chartered surveyor’s professional valuation is provided when policy cover is taken out.

This cover rightly lays claim to offering ‘10 of the best’ – elements that landlords have previously struggled to find in a commercial or residential landlords’ insurance policy, or for which an extra charge has typically had to be paid, making our exclusive option well worth considering.

Automatic accidental damage cover and subsidence cover are offered as standard – the latter being a real bonus after last year’s heatwave and drought.

Another key area ticking a landlords’ box is rental income protection, providing cover for lost rental income should damage occur before a new tenant moves in. Any costs incurred in housing them elsewhere will also be picked up as per the policy details.

There is not only protection for fixtures and fittings, outbuildings and annexes, but also for components of the property, such as walls, fences and car parks, and those more likely to be found in a high net worth rental property, such as a tennis court.

Scenarios such as flood, lightning and explosion are covered, along with theft cover and tenant damage protection. Whether property is damaged by a leakage of oil, or an infestation of vermin, we can ensure you will have cover for the agreed cost of repairs and reinstatement.

The exclusive arrangement to which we have access also protects landlords against outbreaks of infectious diseases within a mile of their property, which might render their properties impossible to access. Up to three months’ rent will be covered if that is the case.

Costs incurred via the legal obligation to recycle items that have been left at the premises by fly-tippers can also be claimed. Should a landlord with a portfolio of properties accidentally forget to name one property, that is seen just as a natural mistake.

Whilst landlords’ covers continue to focus on practical losses, such as the provision of replacement keys and modern-day issues such as unauthorised occupants and the utility bills they may rack-up, the world of landlord insurance is also embracing less tangible losses.

Reputational damage is one of these and our exclusive option offers up to £2500 of PR support to handle a media crisis and carefully manage a landlord’s image.

Such covers provide a real step-up for landlords who need wide-ranging coverage for their property. Discovering how this can protect your portfolio can be done in just one phone call, so contact us now.


Intellectual Property (IP)

What is it?
Intellectual Property (IP) is something unique which you physically create.  An idea on its own does not count as Intellectual Property.

Having the right IP protection helps prevent people stealing/copying:
• Names of products/brands
• Inventions
• Design or look of products
• Written words or items made/produced

You own IP if you:
• Created it
• Bought it from the creator or previous owner
• Have a brand that could be a trade mark i.e. a well-known product name

IP can have:
• More than one owner
• Belong to individuals or businesses
• Be sold or transferred

How do you protect it?

Protecting IP makes it easier to take legal action against someone who tries to steal or copy your IP.
The type of protection depends on how the IP was created.  Some protection is automatic and others have to be applied for.

Automatic:
Copyright – Written and literary works, art, photography, web content and sound recordings etc.
Design right – Shapes of objects

Protection for which you must apply:
Trade marks – product names, logos, jingles (application can take up to 4 months)
Registered designs – appearance of product including: shape, packaging, patterns, colours, decoration (application can take up to 1 month)
Patents – inventions and products, e.g. machine and machine parts, tools, medicines and software (applications can take up to 5 years)

by Aoife Woulfe, Tokio Marine Kiln, Syndicate 510, Lloyd’s of London (for the FiSure Newsletter, March 2017)

Insurance

Organisations spend millions of pounds on developing products, services and software which are often protected by Patents, Trade Secrets and Copyrights. They also spend hundreds and thousands of pounds on building the brands under which these products, services and software are sold, which are protected by Trademarks, Copyrights and Designs.

Following the substantial investment in the development and registration of IP, the battle is still not over. Organisations must be willing to make the additional financial investments needed to enforce these rights against competitors, utilising complex legal systems to do so where necessary. Businesses that manufacture, market or offer goods or services for sale, are also exposed to IP risk, be they competitors or just chancers, extending the scope of their IP rights so that they can either obtain an injunction, preventing the products being made/sold, or obtain financial compensation.

If all fields were equal, every company would have the necessary funding to support such enforcement actions or defend their businesses from competitors’ suits.  This is not however how the business world works.  Let’s take one such recent case as an example:

‘Company A is a London-based start-up in the process of securing second-round funding for an innovative App which operates as a personal assistant for busy professionals.  One of the most interesting features of the App is the means by which it facilitates navigation to and from meetings. The App is tipped for big things and has not gone unnoticed by Company B, a global mapping service company.  Company B issued a 104 page cease and desist letter alleging the use of named functions on Company A’s App would cause confusion with its own mapping service App, in which they had invested millions of dollars promoting.  In this case, Company A had no other option than to back down and change the name of its App, as it could not afford to fight the case.’

David v Goliath cases like this one are becoming more common as industry leaders attempt to stifle innovative fledgling companies before the start-up has even considered itself as a ‘competitor’.  It doesn’t stop there: the media is dominated by competitor versus competitor IP lawsuits, as demonstrated in the ongoing titanic battle between Apple and Samsung.  Making the situation ever more perilous, IP lawsuits do not come cheap.  The World Intellectual Property Office (WIPO) estimates the average cost of an IP lawsuit in the US to be between US$3m and US$10m.  The question then arises – how can companies, be they large or small, fend off such attacks on their IP, while protecting their balance sheet from sizeable representative fees and the considerable liabilities awarded by the courts?   One option is Intellectual Property Insurance.

Solihull Insurance Brokers offer IP insurance cover which can be tailored to clients of all sizes from all industries.  IP Infringement Liability Insurance provides representative’s fees and expenses, and the liability where damages or settlements are incurred, in defending claims against alleged IP infringement.  This coverage can also be extended to defend against proceedings brought against a third party licensing the insured’s IP, and with whom a contractual indemnity exists.  Additionally, Small and Medium Enterprise clients may be interested in Enforcement (Pursuit) coverage, which can fund representative’s fees and expenses, assisting an organisation in enforcing their IP rights against those they perceive to be infringing.  These new instruments are just a snapshot of the extensive IP offering from specialist insurers.  Other options for coverage include claims against the ownership, validity or title of an organisation’s IP or contractual disputes including non-payment of royalties and breach of contract.

Whatever the chosen strategic option, as the world continues to become increasingly focused on the intangible, it is important that there is a strategy in place to meet the ever-growing exposure.  If an organisation loses its ability to produce its products or supply its services due to a competitor’s IP challenge via legal proceedings, they are unlikely to survive without the funding to fight back.

To discuss your insurance risk please contact Harrison Law on 01675 446546 or email hlaw@solihullib.co.uk.

Cyber - A Genuine Threat

Please don't think that if you are an SME you are safe!! Cyber crime is a real growing threat.

The criminals use automated scanning systems which fire all the time. It is not targeted attacks, once they find an open portal they will connect to it and see where it goes.

Target – A retail business in the USA were hacked via a Third Party Party website as their defences were not as sophisticated.

The Government hold Cyber crime up there with terrorism in terms of threat to the UK.

Cyber Crime is a real growing threat.

SME’s struggle to combat due to lack of resources and cost

Point of Sale (POS) attacks are most common and can be done through anything with an open internet portal, i.e. electronic tills etc

Anything with an IP address can be affected, even fridges have IP addresses which can be accessed and temperature manipulated etc… 

Healthcare records are being targeted along with retail outlets.

Denial of Service attacks are for sale giving easy access to disgruntled customers/former employees etc…

Useful websites -

UK Cyber Security Strategy - https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/60961/uk-cyber-security-strategy-final.pdf

CiSP – free tool for businesses www.cert.gov.uk/cisp

Action Fraud – www.actionfraud.police.uk - UK’s national fraud and internet crime reporting centre

Get Safe Online – www.getsafeonline.org – Free expert advice on staying safe online.

Cyber Street Wise – www.cyberstreetwise.com –

Government 10 Steps to Cyber Security - https://www.gov.uk/government/publications/cyber-risk-management-a-board-level-responsibility

Cyber Essentials Business Health Check - https://www.gov.uk/government/publications/cyber-essentials-scheme-overview - This will become mandatory for companies with government contracts!!!

Questions –

Do you know the value of your data?

Do you know where your data is stored?

Who has access to your data?

What would you do if you were subject to a data breach?

Who would you report a data breach too, are you obliged to report it?

 

For more information on how to protect yourself should the worse happen please call or email me 01675 446546 or hlaw@solihullib.co.uk

Directors & Officers Insurance - Who needs it and why?

The simple answer is everyone!

Common Misconceptions

‘’Isn’t D&O cover only for only for those running publicly traded or very large businesses?’’

‘’I’m never going to be in a position where I could be sued by one of my employees or stakeholders.’’

‘’It’s too expensive to consider on top of all of my company’s other insurance costs.’’

 

Just some of the reasons D&O Insurance should be in your budget;

 Protection in case of bankruptcy or insolvency

If faced with bankruptcy or insolvency, creditors may pursue legal action against directors if they feel that they have not acted in their best interests. 

Directors’ personal assets are at risk

If a director has been accused of breaching their duties, they are personally liable to defend the claim. Their personal assets are potentially at risk if they do not have adequate D&O cover.

Investigations by regulators are getting more and more common

Investigations and fines imposed by a regulator or body such as the Health & Safety Executive are one of the primary drivers of claims in the current UK business climate. 

SMEs are just as vulnerable as large companies

SMEs are not exempt from D&O claims, they face exactly the same risks and regulations as their larger peers, but often do not benefit from in-house HR or legal teams. 

D&O claims are NOT covered under any other liability policy

A common misconception is that alleged misconduct by directors or companies is covered under other liability policies such as Professional Indemnity. 

Defending a legal action can be costly

Legal costs for defending allegations against the company or one of its directors can often run into tens of thousands of pounds. 

Employment practice claims remain a large threat to directors

In an increasingly litigious society employment practice claims such as sexual harassment or wrongful dismissal can result in astounding settlements. 

D&O insurance is more affordable than ever

A D&O policy can cost from under £500 per year, yet the total cost of a D&O claim can run into hundreds of thousands, if not millions of pounds.

 

Claims Examples

 Directors & Officers Cover

 Pollution

A manufacturer employed a waste disposal contractor to dispose of old oil. Contrary to the manufacturer’s expectations, the contractor dumped the oil in a field and then became untraceable. The Environment Agency brought criminal proceedings against the manufacturer’s directors and considerable defence costs were incurred to achieve their acquittal. 

Civil Fines and Penalties

Under the Finance Act 2009, the Senior Accountant Officers (SAO) of large companies have a duty to take reasonable steps to ensure that the company establishes and maintains appropriate tax accounting arrangements. A duty is placed on the SAO to provide HMRC with particular documents on an annual basis, which meet certain requirements. The SAO of an insured company was fined £5,000 for not complying with their duty, as he did not provide the annual certificate to the HMRC. 

Corporate Liability Cover  

Corporate Manslaughter (Defence costs)

Four teenagers drowned after a disastrous canoe trip. Criminal proceedings for corporate manslaughter were brought against the manager of the company that organised the trip and a separate action was brought against the company. 

Employment Practice Liability Cover 

Employment Practice Liability

A team of female employees brought an action against their employer over claims that they were being paid less than their equivalent male colleagues. Their action was successful and the court awarded them compensation of £10,000 each.


7 top tips for arranging Business Interruption (BI) Insurance

Business interruption (BI) insurance provides a lifeline following a loss, supporting organisations financially until they make a full recovery. However, inaccurate sums insured and inadequate indemnity periods are a major source of underinsurance, jeopardising the chances of recovery for many businesses. The following tips will enable you to arrange the correct level of BI insurance.

  • 1. Have a plan

Planning how to respond to potentially harmful events is vital for any business, and an essential first step in choosing the correct Business Interruption cover. Business continuity planning is a valuable exercise that helps increase an organisation’s resilience through anticipating potential losses and planning how best to respond. It is advisable to record key findings in a formal business continuity plan (BCP), which should remain under regular review and testing, and serve as a core risk management tool. For example, should a key supplier suffer a major loss, a good BCP might detail arrangements with alternative suppliers that could quickly meet urgent customer orders. In addition to boosting resilience, considering potential loss scenarios is the best way of identifying much of the information needed to set suitable Business Interruption cover levels. For example, without fully understanding how an organisation’s variable costs will change following a loss, it will not be possible to set an accurate gross profit sum insured (see tips 3 & 4 below). Equally, without contemplating potential worst-case scenarios, it will not be possible to choose a suitable maximum indemnity period (see tip 5 below).

  • 2. Choose the cover that is right for you

There are three main types of Business Interruption cover:

• Loss of gross profit

• Loss of gross revenue

• Increased cost of working

Loss of gross profit is the most common form of Business Interruption cover, but does feature certain complexities that commonly lead to underinsurance if approached incorrectly. It is therefore important to fully understand how each type of cover operates and carefully assess which is best suited to an organisation’s particular needs. For example, loss of gross profit is specifically designed for manufacturing-type risks and recognises that a downturn in production will actually lead to some cost savings as well. These savings are known as ‘uninsured working expenses’, and form an important part of the gross profit sum insured calculation (see tip 4 below). For organisations with few, or no, uninsured working expenses, a gross revenue basis is likely to be the more suitable basis of cover. Business continuity planning will enable you to understand how resilient an organisation’s operations are, and the likely impacts following a loss.

  • 3. Approach calculations properly

Business Interruption claims are settled by reference to specific formulas listed in the policy wording. As with all sums insured, it is essential to approach BI calculations correctly in order to avoid underinsurance. Calculating loss of gross profit sums insured is where many experience difficulties, and where underinsurance frequently originates. A leading reason is that an accountant’s definition of ‘gross profit’ differs considerably from the figure required for insurance purposes. The former deducts all production costs, whereas the latter recognises that some costs will continue following a loss and therefore need to remain in the sum insured. Not recognising this important distinction frequently leads to figures being provided that do not follow the calculation stipulated in policy wordings, resulting in significant levels of underinsurance.

Common pitfall – ‘Gross Profit’ definition

  • 4. Take care with ‘uninsured working expenses’

Uninsured working expenses (UWEs) form a vital part of the insurable gross profit calculation. If insuring on a loss of gross profit basis, it is important to fully understand the meaning of UWEs and only specify costs that truly fit. UWEs are costs that vary in direct proportion to a reduction in turnover (i.e. if turnover reduces by 30% then that cost will also reduce by 30%). UWEs can often include items such as raw materials, production wages and freight. However, it should never be assumed that these costs are always UWEs. This is something that can vary between organisations, and needs to be identified via business continuity planning. Routinely subtracting certain items during the gross profit calculation is a common source of underinsurance. Another common error is to only think in terms of total losses, whereas the majority of losses are likely to be partial. For example, consider a factory that sends shipments via weekly containers. In the event of a total loss, where production stops completely, this cost should cease, as there are no products to ship. However, following a partial loss, it is likely that this cost will actually remain the same, as weekly shipments will still need to be made. Freight is therefore not a UWE for this organisation, as the cost will not vary in direct proportion to any reduction in turnover.

  • 5. Maximum indemnity periods - be conservative

A maximum indemnity period (MIP) is the time following a loss during which Business Interruption claims can be made. If the MIP expires then claim payments will cease, even if the sum insured has not yet been exhausted. Setting an adequate MIP is therefore just as important as calculating an accurate sum insured. BI insurance is designed to support policyholders until they recover to the position they were in prior to a loss – i.e. return to their former profitability. A common source of underinsurance is to think that this is simply the time taken to reinstate damaged property. However, once an organisation’s property is reinstated, an equal or greater amount of time is often needed for activities such as recruiting staff, commissioning equipment and, vitally, winning back lost business. Additionally, there is a vast range of circumstances that can delay an organisation’s recovery. Not contemplating worst-case scenarios, either by not using proper business continuity planning or being too optimistic about recovery times, is a frequent source of underinsurance. MIPs should reflect the maximum time it could take a business to return to its former level of profitability based on worst-case scenarios.

  • 6. Adjust sums insured in line with MIPs

A simple, yet common mistake, is to not alter sums insured in line with any changes to the MIP. For example, if changing from a 12 month to a 24-month MIP, then the underlying sum insured may need to at least double, as it is now applied to double the length of time. However, this is only a basic calculation, with further consideration needed to ensure sums insured remain adequate for the full length of the MIP (see tip 7).

  • 7. Account for future trends

While cover may be adequate at inception, organisations do not remain static, with revenue and profitability changing over time. BI insurance is designed to put the policyholder back in the position they would have been had they not suffered a loss, and sums insured need to take account of future business trends in order to avoid underinsurance. For example, should an organisation suffer a loss towards the end of a 12 month policy period, and it then takes 24 months before they fully recover, that is 36 months after which the BI cover levels were initially set. If that business was growing at a constant rate of 20% per year, then it would have grown significantly by the end of those 36 months had it not suffered the loss. To ensure cover is adequate for the duration of the MIP, the sum insured needs to reflect both current and future circumstances, accounting for any anticipated business trends.