Business Interruption and AICOW: Navigating Through Unforeseen Challenges

In the ever-evolving landscape of the business world, companies constantly face myriad challenges that can disrupt their operations. From natural disasters and pandemics to cyber-attacks and supply chain issues, these disruptions can significantly impact a business’s ability to function efficiently. Amidst such uncertainties, understanding the concepts of business interruption and Additional Increase in Cost of Working (AICOW) becomes crucial for organisations to mitigate risks and navigate through unforeseen challenges.

Continue reading Business Interruption and AICOW: Navigating Through Unforeseen Challenges


When Should A Business Have Loss of Profits Insurance?

Running a small business comes with its own set of challenges and uncertainties.

Unexpected events can cause serious disruption to your operations including cash flow, like a fire closing the business down while you restock or rebuild.

This is where Loss of Profits (also called Business Interruption insurance), can provide regular payments for fixed overheads, such as wages and utilities as well as loss of net profit.

What type of business needs Loss of Profits

Continue reading When Should A Business Have Loss of Profits Insurance?


Machinery Matters: Why Your Business Needs Plant and Equipment Insurance

Plant and equipment insurance is vital for businesses that utilise heavy machinery and complex equipment in their operations. This specialised form of insurance safeguards against a wide range of risks, providing essential financial protection and supporting business continuity. Here’s a more detailed look at why this insurance is critical:

Continue reading Machinery Matters: Why Your Business Needs Plant and Equipment Insurance


Insurance rebuilding Valuations essential for home or commercial buildings

All property insurance policies, such as farm, business, home and strata insurance policies, require the sum insured (declared value) to be the current cost of replacing the home, shop or factory when the policy is taken out or renewed.
Inflation and increased material and labour costs over the past two years have increased average rebuilding costs by up to 30%.

 

So, we’ve arranged with a national Quantity Surveying firm to provide expert rebuilding cost reports from $660 for homes and small commercial properties in major cities. Valuations can also be arranged for Plant & Equipment.

The insurance rebuilding valuation report can then be given to your insurance adviser and insurer to ensure the right level of cover is in place, giving you peace of mind.

 

Benefit – Right amount of Cover & Peace of Mind

The insurance rebuilding valuation report is prepared by MCG Quantity Surveyors, a licenced professional firm that is an expert in construction costs.

The report will state the amount to rebuild or replace the premises, taking into account the latest building codes, location, construction type and cost of removal of debris.

We will then ensure the right amount of cover, based on the actual cost to rebuild or replace your home, commercial building or investment property.

 

Under-insurance and impact on Claim payments

What happens if the insurance cover or sum insured is not enough to rebuild?

All property insurance policies, including farm, business, home and strata insurance policies, require the sum insured (declared value) when taking out insurance or renewing the policy to be the current cost of replacing the building, home, shop or factory.

Not having enough cover to rebuild or undertake major repairs can cause major delays to repairs or rebuilding, as well as have serious financial consequences.

For example, a factory and contents are insured for $700,000, however the rebuilding value is found to be $1 Million at the time of the fire. In this case, the insurer is likely to apply an underinsurance (also known as an average) clause, which all property policies include.

Not only would this likely delay repairs or rebuilding, but the claim settlement would also only be $612,500 (in this example), leaving a large shortfall in the $1 Million rebuilding costs.

As property rebuilding costs change, so should the amount of your insurance cover.

 

Contact Lewis Insurance Services on 07 3217 9015 or send us an email by clicking here, we can guide you with Emergency Planning and Business Continuity. We pride ourselves on being informed about risk and insurance and ensuring you have the right Insurance policy for your needs. This article was published by our AFSL Licensee, Insurance Advisernet Australia P/L, www.insuranceadviser.net

 

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

 


Insurance Policies and Your Duty of Disclosure

Insurance Policies and Your Duty of Disclosure

It’s important to know that insurance underwriters need full information about the risk to be insured, along with your prior insurance history and some personal information, such as if you have criminal convictions, licence suspensions etc. If the information provided is inaccurate or incomplete, this can lead to claims being delayed or worse. 

Once all the information has been disclosed to the underwriter, they can assess your risks and decide whether the policy is appropriate or not for you. Also, calculate the premium and terms of cover. 

The requirement to provide full information is a legal requirement. It is referred to as either the duty of disclosure for commercial insurance policies (i.e. Professional Indemnity, Management Liability Contract Works) or duty not to misrepresent consumer insurance policies (i.e. home, motor vehicle, travel insurance). 

When does the duty apply? 

Both the Duty of Disclosure and the new Duty for Consumers are part of the Insurance Contracts Act, which is the primary law that sets the standards for both buyers of insurance and insurers. The law aims to ensure fairness and protect the rights of consumers.  The law also states that the Insurer and customer must act in the Utmost Good Faith. That is, act honestly, fairly and transparently. 

Depending on the type of insurance and the reason it is purchased, one of the following duties will apply when:

Taking out new insurance

Completing a proposal form, declaration or questionnaire and asked to answer questions on behalf of other people who are also insured by the policy. So, you’ll have to ask these people the same questions and provide their answers to the insurer to ensure you have the correct insurance. 

For example, if there are other regular drivers of your car or truck, you also need to ask them if they have had speeding fines or lost their licence due to a PCA or DUI charge and tell the insurer.

Changing or renewing your insurance

If you renew or ask for an extension of the policy period, request any change, or add cover, you have to advise the underwriter (or your insurance adviser) if there have been any changes to the answers of information previously provided to the insurer.  

If you are still determining which duty applies to you, talk to your insurance adviser. 

Below is a detailed look at each of the duties when they apply and the consequences when not complied with.

Duty of Disclosure – Commercial & Business clients (not Consumers)

Commercial businesses or premises are complex, with lots of risk factors underwriters have to consider. All underwriters have limits or what they can accept, such as the size of the company, sums insured, location, occupation, building construction or prior claims history. 

To make an informed decision about the cover and premium to be quoted or whether to provide any terms, the underwriter needs complete information about you and the risk to be insured. 

For this reason, you have a legal duty to disclose every matter that you know or would be expected to know that may be relevant to the insurer’s decision as to whether to accept the risk and on what terms the insurance is quoted. So, if you own a building but haven’t checked it for a long period, it would be difficult to answer a question on a proposal from ‘Is the premises in good repair and condition’. Insurers would expect you to know, not guess, before filling out the proposal form. This also applies when answering applications, questionnaires, or declaration questions.

Answers must also be truthful, with complete answers and transparent information. Partial answers or misinformation are often the same as being untruthful. 

Important matters to be disclosed depend on the type of insurance policy. These include for at least five years, the previous claims (insured and uninsured) and incident history. Directors’ personal history of criminal offences and convictions, bankruptcy or liquidation of a company, refusal, or declinature of insurance or claims.  If you’re unsure, talk to your insurance adviser.

You do not have to disclose anything that:

  • reduces the risk to be undertaken by the insurer (i.e. you have a better alarm that the insurer requires);
  • is common knowledge (i.e., in the newspaper, TV);
  • your insurer knows, or in the ordinary course of its business, ought to know (i.e. Cold Storage facilities have walls made of EPS, car dealers sell cars); or
  • if the insurer has waived your obligation to disclose (i.e. you have told the insurer your service truck and they don’t ask for more details).

Again, if you’re unsure what must be disclosed, talk to your insurance adviser.

Consequences of Non-Disclosure

Non-disclosure is usually discovered at the time of claiming, by claims officers, assessors or adjusters. 

If there has been non-disclosure by you or someone covered by the insurance policy, it will at least delay your claim and any settlement until it is investigated. 

Depending on the type of non-disclosure, your insurer may be legally entitled to reduce the amount of the claim settlement or not pay any of the claim, and in some cases, is legally allowed to cancel your insurance policy.

If any part of the non-disclosure was fraudulent, the insurer might be able to cancel the policy from the start date, so in effect, you were never insured and have no right to be covered for the loss or damage. 

Consumer Duty – to take Reasonable Care not to make a Misrepresentation and be Truthful when answering questions

From October 2021, a new Consumer Insurance duty applied to insurance policies used for personal and domestic purposes, such as car, home, boat and travel insurance.

For Consumer insurance policies, insurers can no longer ask ‘catch all’ type questions, such as ‘you must tell us anything that you know or should reasonably know to be relevant’ (this still applies to commercial risks). 

Insurers are now required to ask questions on which they will base their decision to provide a quotation (or not) and the premium and terms. 

Therefore, if you take reasonable care to answer the underwriting questions fully to the best of Your knowledge, accurately and truthfully, the insurer can no longer say there was non-disclosure or misrepresentation.  

Misrepresentation includes a statement that is false, partially false, or which does not fairly reflect the truth. The responsibility to take reasonable care not to make a misrepresentation applies to everyone who will be insured under the Policy. If You are answering questions on behalf of anyone else, the insurer will treat Your answers or representations as being from all persons to be insured under the policy.

Contact Lewis Insurance Services on 07 3217 9015 or send us an email by clicking here, we can guide you with Emergency Planning and Business Continuity. We pride ourselves on being informed about risk and insurance and ensuring you have the right Insurance policy for your needs. This article was published by our AFSL Licensee, Insurance Advisernet Australia P/L, www.insuranceadviser.net

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

 


How your operations impact Workers’ Compensation insurance premiums 

How your operations impact Workers’ Compensation insurance premiums

How your operations impact Workers’ Compensation insurance premiums

Insurance companies charge an amount of money for each policy, called the premium, which is based on a set of rating factors that take into account your business operations, the industry and prior claims history.

In this blog post, we will explore how these affect your insurance premiums and what steps you can take to reduce the risk factors. Most state workers’ compensation systems are underfunded, so premiums are expected to increase over the coming years, especially for businesses with claims and worker injuries.

Firstly, all industries have risks; for example, construction, logging, and mining are physically demanding and have a higher likelihood of machinery-related personal injury claims or exposure to dust, while warehousing and logistics have a higher incidence of back and arm injuries.

Although office-based occupations may have a low personal injury risk, there is an increased risk of mental health issues leading to anxiety or depression. These types of physiological injuries can also have long terms affects, not only physical-related injuries.

Therefore, managing your operational environment and ensuring your employee well-being is key to reducing or potentially eliminating the risk of injury and workers’ compensation claims.

There are very good (free) guides to risk management online, including SafeWork NSW Workplace or When to use risk management.

It’s been proven that a business with a high level of risk management will have fewer claims involving employees and visitors. Therefore, directly reducing both the length of the time away from work and size of the claim and also premium.

Employers with a poor safety record or inadequate risk management will likely have higher insurance premiums than those who prioritise safety and invest in risk management.

Ultimately, working conditions can have a significant impact on your insurance premiums.

Contact Lewis Insurance Services on 07 3217 9015 or send us an email by clicking here, we can guide you with Emergency Planning and Business Continuity. We pride ourselves on being informed about risk and insurance and ensuring you have the right Insurance policy for your needs. This article was published by our AFSL Licensee, Insurance Advisernet Australia P/L, www.insuranceadviser.net

General Advice Warning

The information provided is to be regarded as general advice. Whilst we may have collected risk information, your personal objectives, needs or financial situations were not taken into account when preparing this information. We recommend that you consider the suitability of this general advice, in respect of your objectives, financial situation and needs before acting on it. You should obtain and consider the relevant product disclosure statement before making any decision to purchase this financial product.

 


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